Nvidia (NASDAQ:NVDA) stock has attracted plenty of positive coverage over the past few years – and for good reason. Behind the headlines is a company that consistently exceeds revenue expectations while maintaining strong profit margins, reinforcing investor confidence quarter after quarter.
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Even regulatory roadblocks proved short-lived, as the Trump administration recently greenlit the company’s ability to market its H20 chips to China, reversing a previous ban and effectively clearing a key overhang for investors.
Meanwhile, broader concerns about a slowdown in AI infrastructure spending have also faded. The hyperscalers – those driving the AI boom – have now locked in their 2025 capex plans. Notably, Alphabet took things a step further, bumping its projection by a hefty $10 billion to a whopping $85 billion. That kind of spending speaks volumes about the demand tailwinds Nvidia still enjoys.
With these tailwinds in place, it’s tempting to see this as a no-brainer investment case. But not everyone is on board. One voice of caution is 5-star investor A.J. Button, who isn’t quite ready to join the parade.
“Without being forced, I choose not to get involved in Nvidia stock,” Button says.
The investor is not dismissing Nvidia’s progress. In fact, he acknowledges the company could continue its explosive 50% CAGR pace, making its 2027 Forward P/E of 25x look downright reasonable. And yes, the macro setup – with rising capex and relaxed export rules – certainly supports continued growth.
But Button is more focused on what lies ahead, zeroing in on a key concern: rising competition. AMD is gaining traction, Alphabet is building out in-house chips, and Huawei’s offerings have been potent enough to force Nvidia to slash prices in China.
Still, Button isn’t outright bearish. He credits Nvidia’s massive patent portfolio, entrenched software ecosystem, and the steep switching costs that act as barriers for would-be rivals. Yet, despite those competitive moats, Button remains cautious.
“The bottom line on Nvidia is that it has run up a lot, and is expensive by some metrics, but it’s still not a short,” Button sums up, assigning NVDA a Hold (i.e. Neutral) rating. (To watch Button’s track record, click here)
Turning to Wall Street, however, the broader sentiment remains bullish. Of the 38 analysts tracked, 34 rate NVDA a Buy, translating to a Strong Buy consensus. The average price target stands at $185.79, suggesting ~7% from current levels. Not exactly something to write home about – yet history suggests that when it comes to NVDA, analyst targets often trend higher as momentum builds. (See NVDA stock forecast)
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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.