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The slump in the NVDA stock on Thursday was recorded despite the strides the company is making in the Chinese electric vehicle ecosystem.
American multinational technology company NVIDIA Corporation (NASDAQ: NVDA) has seen a massive shrinking in its stock price on Thursday. The company, which is known for designing graphics processing units for the gaming and professional markets, as well as system on a chip unit for the mobile computing and automotive market slumped 5.09% to $265.75.
Many are attributing the slump to the shunning of the stock by Japanese investment banker Mizuho Financial Group which raised the price targets of many semiconductor companies. As reported by the Motley Fool, Mizuho raised the price target of Micro Technology Inc (NASDAQ: MU) to $110, up 12% from its current level of about $95. Western Digital Corp (NASDAQ: WDC) was given a new price target of $83, up 11% from its current price point and Advanced Micro Devices Inc (NASDAQ: AMD) was favored by Mizuho to $150 atop an 11% growth from its current spot.
With NVIDIA being the biggest player in the industry, many saw the deliberate neglect as a sly on the company, and investors seem to be capitalizing on this situation. However, if the historic target calls of Mizuho are brought into proper perspectives, it will be considered that the investment banker is almost as interested in NVIDIA as any other semiconductor manufacturer out there.
Earlier in the year, the Mizuho team raised the price target of NVIDIA to $335 a share, a price point that represents about 25% from current levels. This target is even more ambitious than the calls on other smaller competitors as showcased earlier.
NVDA Stock Slump Despite Traction in Chinese Markets
The slump in the NVDA stock on Thursday was recorded despite the strides the company is making in the Chinese electric vehicle ecosystem. According to a CNBC report, many Chinese EV makers including Nio Inc (NYSE: NIO), Xpeng Inc (NYSE: XPEV), and Polestar are now relying on NVIDIA to power their so-called advanced driver-assistance system or ADAS.
With NVIDIA coming off as one of the most important players in the global chip industry, these Chinese EV makers are notably choosing the company in order to compete with Tesla Inc (NASDAQ: TSLA) which produces its own chips internally.
“For a Chinese EV company, or globally, there is not much to match what Nvidia can offer,” said Bevin Jacob, partner at Shanghai-based investment and consulting firm Automobility.
According to Aakash Arora, the managing director, and partner at Boston Consulting Group, integrating ADAS is now considered the “Key Differentiators” in the high-performance EV market.
“Most EV models today compete in price segments where having ADAS is critical from a customer expectation perspective,” Arora said. “Early adopters of EVs are also likely early technology adopters and value technology features more.”
With more markets billed for NVDA in the world’s largest EV market, it is only a matter of time before the current bearish stock outlook changes course.