The stock of Nvidia has risen as a result of the upgrade. Ethereum Won't Collapse Like Bitcoin Did

Analysts at New Street upgraded Nvidia stock on Wednesday, saying their concerns about crypto-related weakness had essentially passed them by and that the outlook for gaming and data centre remained "extremely solid." Analyst Pierre Ferragu raised his price target to $280 from $250 and upgraded the stock to Buy from Neutral.

In a research note, he stated, "The secular outlook for gaming, visualization, and datacenter is still extremely high, and on the data centre front, near-term visibility is also quite strong, with supply limitations being the limiting factor."

The impact of crypto mining on Nvidia's revenue is one of the major concerns among investors. That was an issue in 2018, when Bitcoin and other cryptocurrencies fell, causing Nvidia's relative multiple to drop by around 30% and sales to drop for four quarters in a row, according to Ferragu. Ferragu cautioned investors in 2021 that it may happen again, citing a decrease in bitcoin activity and an oversupply of Nvidia (ticker: NVDA) graphic chips as reasons. It's a reasonable concern, given that Ethereum mining alone is expected to improve Nvidia's gaming income by nearly $2 billion in 2021, according to Ferragu.

Ferragu doesn't expect such a large impact this time, partly because the market may have already priced in a crypto drop. According to the researcher, the relative multiple has already shrunk by 25% since November 2021. And that's before the company's data centre momentum, which "benefits from great demand driver and a product cycle," according to him.

As a result, Ferragu stated, "We no longer see crypto as a reason not to purchase the stock." "A crypto-driven slump would be small, transient, and simply serve as an opportunity to add to positions."

Most analysts agree with Ferragu's assessment of the stock, with 82 per cent of those polled by FactSet rating it as a Buy, though others are more cautious. On Monday, Baird analyst Tristan Gerra cut the company from Outperform to Neutral, citing concerns about declining consumer demand and falling graphic card pricing.

On Wednesday, Nvidia's stock rose 3.3 per cent to $222.03. This year, the stock has dropped by 25%.