Why One Analyst Turned Bearish on This Nvidia Supplier -- Barrons.com

Dow Jones00:53

By Emily Dattilo

Shifting winds in the artificial intelligence realm could spell trouble for Fabrinet, B. Riley argued on Wednesday.

Analyst Dave Kang downgraded shares of the company, which makes optical cables for Nvidia, to Sell from Neutral. He slashed his target for the stock price to $178 from $194.

Fabrinet stock dropped 10% to $223.82 in morning trading, putting it on track for its largest daily percentage decrease since February, according to Dow Jones Market Data.

So far, Amazon.com, Microsoft, and Meta Platforms have been buying Nvidia graphics processing unit platforms, which contain other components including optics, which are supplied by Fabrinet and others, Kang explained. The three companies, known as hyperscalers, are Nvidia's largest customers, but the analyst says research indicates Amazon is about to switch its purchasing model to only buy Nvidia's GPUs and create its own platforms.

"This won't impact NVDA's GPU business, but will impact NVDA's optics business since it is about to lose one a major customer in AMZN," the analyst continued. "This unbundling trend could threaten FN's optics business, since we believe it's just a matter of time before MSFT and META follow their competitors' footsteps."

Fabrinet, Nvidia, and Amazon didn't immediately respond to requests for comment. Nvidia is scheduled to report its quarterly earnings after markets close Wednesday.

Write to Emily Dattilo at emily.dattilo@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

November 20, 2024 11:53 ET (16:53 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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He slashed his target for the stock price to $178 from $194. \n</p>\n<p>\n     Fabrinet stock dropped 10% to $223.82 in morning trading, putting it on track for its largest daily percentage decrease since February, according to Dow Jones Market Data. \n</p>\n<p>\n     So far, Amazon.com, Microsoft, and Meta Platforms have been buying Nvidia graphics processing unit platforms, which contain other components including optics, which are supplied by Fabrinet and others, Kang explained. 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Riley argued on Wednesday. \n\n\n     Analyst Dave Kang downgraded shares of the company, which makes optical cables for Nvidia, to Sell from Neutral. He slashed his target for the stock price to $178 from $194. \n\n\n     Fabrinet stock dropped 10% to $223.82 in morning trading, putting it on track for its largest daily percentage decrease since February, according to Dow Jones Market Data. \n\n\n     So far, Amazon.com, Microsoft, and Meta Platforms have been buying Nvidia graphics processing unit platforms, which contain other components including optics, which are supplied by Fabrinet and others, Kang explained. The three companies, known as hyperscalers, are Nvidia's largest customers, but the analyst says research indicates Amazon is about to switch its purchasing model to only buy Nvidia's GPUs and create its own platforms. \n\n\n     \"This won't impact NVDA's GPU business, but will impact NVDA's optics business since it is about to lose one a major customer in AMZN,\" the analyst continued. \"This unbundling trend could threaten FN's optics business, since we believe it's just a matter of time before MSFT and META follow their competitors' footsteps.\" \n\n\n     Fabrinet, Nvidia, and Amazon didn't immediately respond to requests for comment. Nvidia is scheduled to report its quarterly earnings after markets close Wednesday. \n\n\n     Write to Emily Dattilo at emily.dattilo@dowjones.com \n\n\n     This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal. \n\n\n \n\n\n  (END) Dow Jones Newswires\n\n\n  November 20, 2024 11:53 ET (16:53 GMT)\n\n\n  Copyright (c) 2024 Dow Jones & Company, Inc.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485174142"}