Nvidia is really behind on something it’s been doing easily for years – doubling in market value!
The AI hype started by ChatGPT in late 2022 turned Nvidia to the posterchild of the industry, with traders jumping in and making big bucks over the past two years. But if you’re thinking there’s more ‘get rich quick’ vibes coming from the big N… think twice.
The pace the stock was rising at was hardly sustainable anyways. If it had carried on growing at the same clip, it would have hit $5 trillion by now.
But it’s chilling at $3.3 trillion. Is Nvidia even Nvidia anymore?
The slow train
After SIX quarters of doubling sales, growth has slowed a wee bit, and projections aren’t as rosy as investors are used to.
The real issue is long-term demand. Nvidia boomed as companies like Google and Amazon overhauled their data centers with its AI-powered servers. So, as those kinds of customers begin pulling back on orders, “not only will Nvidia’s growth slow, it will reverse course,” says DA Davidson & Co analyst Gil Luria.
Revenue is actually going to decline, which will cause earnings to decline at an even faster rate. “That is very likely to happen in a year or two.”
In fact, Nvidia has struggled to meet the astronomical profit expectations set for it for two straight earnings seasons. (Just “beating” estimates doesn’t cut it when the hype’s that big. Smash it or go home). All that’s making some folks a bit cautious.
Nvidia vs. others
- Nvidia scaled $1 trillion, $2 trillion and $3 trillion in valuation in little over a year. (Apple achieved these milestones over five years.)
- Since its 2022 bottom, Nvidia’s stock has doubled three times. And the average time it took to do that? 176 days.
- Here is where it gets truly bonkers: Nvidia is almost twice as expensive as Apple and three times as pricy as Alphabet on a price-to-sales ratio basis. Its revenues are soaring fo sho, but the stock has been moving at lightning speed as well. (Until now.)
- At its current value, Nvidia pretty much can’t afford to stumble, whether it’s delays to its Blackwell chips, missing analysts’ targets or clients pulling back on spending.
No moonshot
That doesn’t mean Nvidia’s a flop. Far from it. It remains the fastest-growing megap-cap (Bank of America likes the stock for its “substance” 😀). Even analysts agree – their consensus 12-month price target is at $175, which implies a 30% upside from here, according to LSEG data.
AI and AI server demand is still crazy hot and Nvidia’s Blackwells are only just starting to ship to customers.
The bottom line remains: There are more reasons for $NVDA to cool off from its meteoric rise rn than to stage another moonshot.
