There’s no argument regarding the stunning performance of Nvidia (NASDAQ:NVDA). The company has catapulted up the charts on the power of its best-in-class GPUs, creating over $4 trillion in value over the past few years.
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And the business fundamentals continue to fire on all cylinders. Nvidia’s most recent third-quarter fiscal 2026 numbers remain beyond robust, with record-setting revenues of $57 billion and margins north of 73%. The next quarter should represent more of the same, with Nvidia guiding for $62 billion in revenues (plus or minus 2%) and those already-high margins continuing to creep higher. The company’s Blackwell chips were a big hit, and the next-gen Vera Rubin architecture is expected to drive billions in sales when it hits the market next year.
Yet, even with this extraordinary track record and a pipeline built for continued dominance, investor Sean Williams warns that the real risk lies in the stock.
“History also shows that hyped innovations and game-changing technologies have, without fail, all endured bubble-bursting events early in their expansion over the last three decades,” explains the investor.
Williams argues that investors have a strong track record of overestimating how long it takes for new technologies to really catch on and start paying dividends. He notes that one could argue that this is taking place right now with AI, as most businesses have yet to enjoy positive returns from their investments.
“It takes for hyped technologies and innovations to be adopted, utilized, and optimized – yet this point is somehow lost on investors with every next-big-thing investment cycle,” emphasizes Williams.
The investor also flags Nvidia’s “otherworldly valuation” as another bubble-inducing concern. Drawing a parallel to the dot-com era, Williams notes that trailing twelve-month price-to-sales ratios for giants like Amazon, Cisco, and Microsoft peaked between 31 and 43 just before the bubble burst.
While the investor is reluctant to name a time for all this to play out, he is convinced that the storm clouds are gathering.
“A 50% or greater plunge should be expected if history were to repeat itself,” concludes Williams. (To watch Williams’ track record, click here)
That’s a memo Wall Street hasn’t received yet. With 39 Buys and just one Hold and one Sell apiece, NVDA enjoys a Strong Buy consensus rating. Its 12-month average price target of $258.10 implies potential gains north of 40%. (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.