Nvidia’s (NASDAQ:NVDA) July quarter results prompted a rare instance of the stock retreating post-earnings. Nevertheless, almost all subsequent commentary on Wall Street was positive, and really, why not? After all, Nvidia’s latest readout featured all the usual hallmarks: beats on both the top and bottom lines and a better-than-expected outlook, albeit all in slightly less resounding fashion than investors have grown accustomed to.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
However, while out-and-out NVDA bears are almost as rare as a dud quarterly report from the chip giant, the Street does boast one analyst who is willing to take on the role of the obligatory contrarian.
That would be Seaport’s Jay Goldberg, who has maintained a Sell rating on NVDA shares and backs that up with a Street-low price target of $100. The implication for investors? Downside of 43% from current levels. (To watch Goldberg’s track record, click here)
The jewel in the Nvidia crown has been its all-conquering Data Center business, but Goldberg thinks it’s not quite as bulletproof as most would have you believe. This quarter marked the first with a full contribution from the Blackwell GPU. The industry had been anticipating the launch of this system for a year, but the expectation of meaningful upside “did not arrive.” In fact, a “key concern” from the quarter relates to Data Center revenue, which grew just 5% sequentially – the slowest pace, and the first single-digit increase, since the AI boom began. Notably, the Compute portion of the segment actually fell 1% sequentially, with stronger-than-expected networking sales preventing a larger decline. “We expected much more robust Compute and could not find a good explanation for this decline from the earnings call,” Goldberg went on to say.
Goldberg also finds holes to pick elsewhere. On the earnings call, the company reiterated the same use cases and technological advances it has highlighted for some time. For example, when asked what would drive growth this year, CEO Jensen Huang pointed to “Agentic AI.” While the concept of linking AI models to perform tasks independently “sounds appealing,” practical implementation has so far fallen behind expectations. “This is a challenging task and no one has a working product that offers this to a general audience,” Goldberg said on the matter.
Dismissively, the analyst says the call also included the “usual gems” like ‘AI will drive GDP growth’, and claims that AI Factories are evolving into AI Super Factories – and even AI Giga Factories – capable of generating vast numbers of “tokens.” Goldberg’s not buying it. “We are increasingly concerned about near term demand as few companies have found ways to drive revenue from AI beyond coding tools,” he opined.
Turning to the big issue of China, Goldberg says the company’s frustration was palpable: despite reaching a deal with the US government to allow shipments, they still lack the necessary approvals. The company hinted that Congressional legislation might be required, which could take significant time. Goldberg’s main concern is that prolonged delays only give Chinese companies more time to strengthen domestic alternatives – a point the company itself raised last quarter. “Overall, we think this quarter’s results demonstrate that while Nvidia leads the market, it is seeing real constraints on its growth,” Goldberg added.
The analyst thinks these constraints – ranging from supply chain friction and the data center industry needing new skills to electricity limits and geopolitical factors – make it challenging for the company to beat expectations this year, aside from the potential upside from shipments to China.
Goldberg, however, is alone here in his bearish stance and the rest of the Street’s ratings breakdown into 35 Buys and 3 Holds, all for a Strong Buy consensus rating. At $208.97, the average target suggests shares will gain 20% over the next year. (See Nvidia stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.