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Nvidia Corp. (NVDA, Financials) shares slid more than 7% Thursday morning after HSBC downgraded the stock, citing signs that the chipmaker's pricing power for its high-end graphics processors is beginning to weaken.HSBC lowered its rating on Nvidia to Hold from Buy and reduced its price target to $120 from $175, warning that the company's ability to command premium prices for its AI-focused graphics processing units may be nearing a plateau.
As of 10:53 a.m. Eastern Time, Nvidia shares were trading at $102.62, down $7.81 or 7.07%.
In a note to clients, HSBC analyst Frank Lee said Nvidia's product cycles are showing limited pricing upside. He pointed to the lack of significant average selling price increases between Nvidia's latest GPU modelsthe B200 and B300as well as between its GB200 and GB300 systems based on the NVL72 rack architecture.
The upcoming Vera Rubin platform, which adds HBM4 memory, will also retain the current GPU count of 72 per rack, mirroring the existing Blackwell design. Lee said that configuration won't change until Rubin Ultra is introduced in calendar year 2027, limiting Nvidia's ability to boost pricing in the interim.
HSBC had upgraded Nvidia in April 2023 on the belief that the company's AI GPU pricing power and product mix were undervalued by the market. However, the firm now sees limited near-term catalysts for earnings growth, and revised its fiscal 2026 estimates downward.
Lee also flagged broader market concerns, including a potential slowdown in demand from cloud service providers and a possible deceleration in orders from Chinese AI firm DeepSeek. While long-term bets in robotics and autonomous systems may eventually expand Nvidia's total addressable market, the analyst expects growth to moderate in the near term.
This article first appeared on GuruFocus.