Nvidia (NASDAQ:NVDA) stock has been on a tear, with the company smashing revenue records, skillfully sidestepping regulatory challenges, and staying miles ahead of the competition. Over the past three months alone, NVDA shares have soared nearly 60%, pushing its valuation above $4 trillion and making it the most valuable publicly traded company on the planet.
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Yet, amid this historic rally, not everyone is convinced the momentum can continue unchecked. While acknowledging the numerous arguments in NVDA’s favor, including its dominant AI chips and robust software ecosystem, investor Avery Goodman is growing wary of what he sees as an overheated narrative.
“Valuation is extremely high, reflecting lofty growth expectations; I believe the stock is vastly overpriced and vulnerable to a market correction,” explains the investor.
One of Goodman’s key concerns centers on a structural shift in the AI space – from training to inference –which could fundamentally alter the competitive dynamics. As inference tasks become more prominent, the distinct edge held by Nvidia’s powerful (and expensive) chips may be challenged. Goodman notes that hyperscalers such as Meta and Microsoft are already working with AMD’s MI300X chip for specific inference applications, while Alphabet and Amazon are developing custom chips of their own.
“As AI shifts from training to inference, more specialized chips may gain competitive advantages over Nvidia’s general-purpose GPUs,” Goodman adds.
This potential shift in chip preferences is not the only risk on Goodman’s radar. He also highlights Nvidia’s dependence on a small number of key customers and market segments – a “concentration risk” that could magnify the downside if demand patterns change. Coupled with the breakneck pace of innovation in AI, this reliance forces Nvidia to constantly stay ahead or risk being left behind. Yet, Goodman argues, such vulnerabilities are “not fully accounted for in the super-bullish assessments of many analysts touting Nvidia shares.”
Additional headwinds may also come from the supply side. Goodman cites ongoing challenges tied to Nvidia’s advanced packaging requirements. Despite recent efforts to address delays associated with the Blackwell launch, he warns that the intricate nature of this work “remains an ongoing challenge.”
Bringing all these risks into focus, Goodman circles back to what he views as the most pressing issue: valuation. The investor contends that the bull run of years past has created an “Everything Bubble,” and he thus predicts that a major correction could be coming soon.
“Its extraordinarily high valuation combined with mounting risks demands caution,” the investor concludes, assigning NVDA stock a Hold (i.e., Neutral) rating.
Wall Street, however, isn’t nearly as cautious. With 34 Buys, 3 Holds, and just 1 Sell, NVDA carries a Strong Buy consensus rating. (See NVDA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.