The analyst says Nvidia is a “core holding company”. But it does face headwinds for short-term gaming.

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Do not sell your shares

nvidia

So far, Morgan Stanley recommended. Analyst Joseph Moore wrote Tuesday that the stock remains a “core property,” although concerns about a slowdown in the gaming sector remain a short-term risk.

Moore resumed coverage of Nvidia (stock ticker:

NVDA

), rating the stock at an equal weight and setting a $217 price target.

“The stock is an essential possession; our approach is to at least keep the market weight in the stock, and look for points to gain weight,” he wrote on Tuesday.

Nvidia stock fell 0.06% to $195.22 on Tuesday.

While Moore is optimistic about the company’s long-term prospects and market position, he is modeling a significant slowdown in gaming that could lead to the challenge of 2023. The analyst expects a 20% consecutive decline in games in the April 2023 quarter, but believes growth could support the launch of New ray tracing products.

Moore wrote that this slowdown could be offset by strong growth in other parts of Nvidia’s business, including the data center segment, the professional visualization segment, and the automotive segment.

Moore added that Nvidia’s data center, in particular, is experiencing strong year-over-year growth as the company expands its offering and customers move to cloud-based storage solutions. The part was a bit restricted due to the lack of chips, but that could improve as the jams are eased, he wrote.

Nvidia shares have been battered over the past weeks, losing nearly 34% since the beginning of the year amid concerns about it sluggish consumer demand For PC and game cards. The semiconductor industry was also affected by higher interest rates which cooled investors off from growth stocks.

But nonetheless, Nvidia had the highest turnover among its peers, Moore said, which was “too rich for the setup” he sees in the stock, leading to his equal weight rating.

“The bearish setup in consumer final markets keeps us on the sidelines until the near-term business outlook improves. However, a further correction in the stock price will allow us to become more positive.

Moore is one of seven analysts covering stocks at FactSet who rated Nvidia a decade. Of the 45 analysts covering the stock, 37 or 82% rated it as buying or overweight, while one, or 2%, ranked it as selling.

In mid-April, Byrd analyst Tristan Gera downgrade to Neutral from Outperform and lowered the target price to $225 from $360, saying that while he believes in the company’s long-term fundamentals, recent order cancellations in the consumer GPU segment could signal trouble ahead.

Write to Sabrina Escobar at [email protected]