Citi cuts estimates on Nvidia, Marvell on worries over slowing knowledge middle spending

Funding agency Citi reduce its earnings estimates on Nvidia (NASDAQ:NVDA) and Marvell Know-how (NASDAQ:MRVL) on Tuesday, citing worries over slowing knowledge middle gross sales on account of the weakening world economic system.

Analyst Atif Malik lowered his 2023 earnings per share estimates on Nvidia (NVDA) and Marvell (MRVL) by roughly 10% and 1%, respectively, noting {that a} weakened macro surroundings and promoting gross sales are more likely to gradual cloud spending to roughly 10%, in comparison with 15% this 12 months.

“Whereas our provide chain discussions proceed to point cloud compute demand stays 15-20% above provide at US hyperscalers, we observe slowing macro and promoting gross sales will seemingly influence cloud capex progress to ~10% from 15% this 12 months,” Malik wrote in a observe to purchasers.

The analyst additionally reduce the goal costs on Nvidia (NVDA) and Marvell (MRVL) to $210 and $71, down from $248 and $74, respectively.

Malik added that long-term demand for GPUs and customised off-load ASICs are nonetheless within the “early innings,” with new product cycles from Nvidia (NVDA) and Marvell (MRVL) more likely to maintain performing effectively and may outperform cloud computing spending by an element of three and two, respectively.

Individually on Tuesday, funding agency Wells Fargo upgraded Marvell Know-how (MRVL), stating {that a} “wholesome quantity of pessimism” has now been priced into the inventory.