Lynx Equity Cuts Nvidia’s Rating Ahead of Q2 2025 Earnings

Lynx Equity analyst KC Rajkumar maintained on August 27, 2025, Nvidia’s price target of $160.

“The reviews of GPT-5 are in and they have been, with few exceptions, uniformly negative.

Due to a backlash from power users, OpenAI was forced to bring back older GPT-4 models.

As far as we can tell there has been just one public testing of the model, in the form of a hackathon hosted by OpenAI.

Negative reviews started pouring in after that event.

We are aware of at least one hackathon event (hosted by a16z) that was cancelled, presumably because the sponsors were not looking forward to more negative reviews.

What does this have to do with NVDA’s earnings event today?

GPT-5 runs on NVDA’s NVL72 platform, going by the observations at the OpenAI hackathon. This should come as no surprise.

The largest LLM in the world ought to run inference workloads on NVDA’s GPU with the highest memory density, the GB200.

Continued demand for GB200 and its follow-ons may depend on the pace of GPT-5 adoption.

GPT-5’s initial feedback does not bode well for GB200.

Popular LLMs running on NVDA GPUs, such as Deepseek, Llama and Claude may prefer to remain with the Hopper series due to lower initial cost and less demanding power/cooling needs.

Just a few months ago at the height of the tariff fears, with few takers on the Street and with NVDA stock trading barely above $100, we pivoted to a bullish stance due to our view that NVDA’s CEO had figured out multiple avenues to minimize the impact of tariffs (link).

We set our PT to $140.

Going into FQ1 earnings, we maintained our positive stance and raised PT to $160 (link).

Faced now with having to pay a hefty tax of 15% of revenue for exports to China, we think our tariff-based investment thesis on NVDA has played itself out.

Going into the earnings event today we think investors are one-sided on the long end.

We suspect investors have not quite made the connection between negative reception GPT-5 has received and its potential impact on GB200 demand pipeline.

Nor have investors considered the possibility that export tax may be imposed for export to additional countries, opening the stock to additional headline risk.

For the present though, NVDA is likely to provide a monster guidance for FQ3 as CSPs build GB200 capacity for training workloads.

The stock may well spike up on print/guide. In the days and weeks ahead though we think the stock is likely to fade.

We are stepping away from the stock. We maintain our $160 PT.”

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