Nvidia Corp. NVDA has acquired a uncommon downgrade from New Avenue Analysis, with the analyst citing considerations concerning the inventory’s overvaluation.What Occurred: New Avenue Analysis analyst Pierre Ferragu downgraded Nvidia’s inventory from purchase to impartial, citing that the inventory is “getting absolutely valued” after a outstanding 161% surge this yr thus far. The inventory had beforehand seen a achieve of just about 240% in 2023.Ferragu expressed doubt about any extra upside, stating that it could solely materialize in a bull case, which isn’t but sure. He additionally warned of a possible threat of derating if the present outlook stays unchanged.Subscribe to the Benzinga Tech Traits publication to get all the most recent tech developments delivered to your inbox.Regardless of the AI frenzy, Ferragu notes that there’s a normalization relating to demand for Nvidia’s AI-oriented graphics processing models, or GPUs.”Whenever you hearken to purchasers of Nvidia, we see demand is totally consistent with expectations,” stated Ferragu in an interview with CNBC.See Additionally: Tech Bull Shares Prime Inventory Picks For Second Half Of 2024 After AI-Fueled Rally: Do You Personal These Shares?Regardless of the downgrade, Nvidia stays the second-best performer amongst S&P 500 elements this yr, trailing Tremendous Micro Pc Inc., one other AI investor favourite. The corporate’s market capitalization has elevated by nearly $1.9 trillion, briefly making it the world’s largest firm.Why It Issues: The current surge within the U.S. inventory market, largely pushed by the promise of synthetic intelligence, has drawn comparisons to the dot-com bubble of the late Nineteen Nineties.This has raised considerations about one other overvaluation state of affairs, because the market is at the moment dominated by a small group of tech giants, with Nvidia among the many high performers.Regardless of the downgrade, New Avenue Analysis is optimistic on each Superior Micro Units Inc. AMD and Taiwan Semiconductor Manufacturing Co Ltd. TSMC, citing their progress tendencies and valuations.AMD and TSMC are “one of the best names to personal within the group, providing sturdy upside in each in our base and excessive situations,” New Avenue stated in a notice, including that amongst different shares with AI publicity, Broadcom Inc. AVGO, Arista Networks Inc. ANET, and Micron Expertise Inc. MU all “stay attractively valued.”Nvidia CEO Jensen Huang has been offloading the corporate’s inventory, promoting over $29 million value of shares amid the 161% surge in 2024.This rise has led to Nvidia’s market worth exceeding $3 trillion, underscoring the corporate’s dominant place within the tech trade.Take a look at extra of Benzinga’s Shopper Tech protection by following this hyperlink.Learn Subsequent:Key Nvidia Provider SK Hynix To Get Additional Enhance From AI Demand Even After 90% Inventory Surge, Goldman Sachs And Citi PredictDisclaimer: This content material was partially produced with the assistance of AI instruments and was reviewed and printed by Benzinga editors.Photograph courtesy: Shutterstock