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Why Is Nvidia (NVDA) Stock Down Today?

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Shares of Nvidia (NVDA - Free Report) were down more than 2% shortly after the open Thursday as investors reacted to a fresh research note from Morgan Stanley that raised questions about performance in the company’s gaming division.

Morgan Stanley analyst Joseph Moore in a note to clients Thursday described Nvidia’s gaming data points as “mixed” and said that his firm “wouldn’t expect near term upside from gaming.”

“As review embargos broke for the new gaming products, performance improvements in older games is not the leap we had initially hoped for,” the analyst wrote. “Still, new features such as ray tracing and DLSS will matter more longer term.”

Ultimately, Moore concluded that he and his team “still like the stock.” Morgan Stanley has an overweight rating and a $273 price target for Nvidia. This call represents just over a $1 rally from NVDA’s closing price on Wednesday.

Nvidia has been one of the lone bright spots in an increasingly rocky semiconductor industry this year. Shares of the GPU maker are up nearly 36% in 2018, outpacing its industry’s average gain of about 12%.

Still, adjustments to Nvidia’s earnings outlook have been mixed recently. The firm has witnessed five positive revisions and six negative revisions to earnings estimates for the fiscal year ending in January within the past 60 days.

This murky estimate revision trend has kept the stock at a Zacks Rank #3 (Hold). But Nvidia does sport a “B” grade in the Growth category of our Style Scores system, and analysts are still looking for full-year earnings to improve nearly 62% in the current period.

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