Anyone new to the crypto sphere received a freezing cold bath this week as the whole space from Bitcoin downwards went through one of its terrifying swoons. The freefall kicked off after Elon Musk said Tesla will no longer accept Bitcoin as a form of payment due to the huge energy resources required to mine it and accelerated from there.
Crypto mining was also high on the agenda this week at Nvidia (NVDA), but for an entirely different reason. The crypto gold rush has caused a huge uptick in demand for Nvidia’s GPUs which are used for mining Ethereum and other cryptocurrencies. This has caused massive shortages for gamers – Nvidia’s core customers – who have found it increasingly difficult to get their hands on the graphics cards.
Nvidia has made it clear where its priorities lie. After announcing in February that all new 3060 mid-range graphics cards would come with a feature that would drop the Ethereum hash rate, the GPU giant has now announced it will slash the hash rate in the latest 3080, 3070, and 3060 Ti cards, making them less desirable for miners. The cards are expected to hit the stores at the end of May.
So, what does this all mean for investors, specifically, those who have been worried that a drop in the price of Ethereum will see a big sell-off of cards, which will flood the secondhand market, creating excess supply?
Raymond James’ Chris Caso thinks there are two implications to consider from the announced change.
“First, it will significantly reduce demand from miners for new NVDA 30-series cards. That will move shift demand from mining to gaming,” the 5-star analyst said. “But secondly, we think it will significantly reduce the risk of miners selling their used cards. That’s because only 3080 and 3070 cards manufactured before May will be very valuable to miners, and there will be no new supply coming onto the market (except for the mining-specific CMP cards sold to large miners, which is expected to represent $50 million in 1Q revenue).”
Taking all of this into consideration, Caso stays with the bulls. The analyst rates NVDA a Strong Buy along with a $750 price target. Investors could be sitting on gains of 28%, should the target be met over the following months. (To watch Caso’s track record, click here)
Overall, Nvidia has most of Wall Street’s analyst corps on its side. Out of 27 recent reviews, 2 recommend to Hold, while all the rest say Buy, naturally culminating in a Strong Buy consensus rating. In the year ahead, the shares are anticipated to add 21% of muscle, considering the average price target stands at $680.20. (See Nvidia stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.