Nvidia’s (NASDAQ: NVDA) stock has sold off slightly lately. However, it is up year to date by 78%, and over the last year by 233% to $880. One Wall St. analyst expects it to drop to $620. Recently, Nvidia stock did stumble.
Gil Luria, senior software analyst at D.A. Davidson, has a “hold” rating on the shares, which is considered the equivalent of a “sell” of many firms. He says the company has “pulled forward demand.” That means that customers have ordered chips now that they will use later. This also means that 2025 customers will have a large enough inventory to slow orders of Nvidia chips. The argument is that Nvidia’s revenue could even decline quarter over the same quarter compared to last year.
Luria also believes that Nvidia’s challenge is that companies, including Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN), do not want to be caught if there is a shortage of Nvidia chips. It is better to keep some reserves.
Another argument beyond the D.A. Davidson is that competitors that currently trail Nvidia in technology will begin to catch it. AMD is at the top of this, but even if it is relatively weak, giant Intel (NASDAQ: INTC) will stake out a spot in the sector.
The most significant case against Nvidia is the one used against many companies whose shares doubled or tripled in price over one year. An ounce of difficult news can trigger a sell-off.
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Author: Douglas A. McIntyre
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