As the final week of 2025 dawns, investors and analysts alike are looking back on the year that was to salute the winners. Nvidia Corporation (NASDAQ:NVDA) was among those companies that rewarded investors handsomely.
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Indeed, NVDA’s share price is up some 40% year-to-date, and its blistering performance during the latter part of the year (more than doubling since hitting an early April low) has been a particularly bright spot.
Worries of an AI bubble have been gaining steam, however, putting a bit of a damper on market sentiment. Though Nvidia hasn’t escaped unscathed, recent indications that the company will likely be able to ship its H200 chips to China helped give the share price another bump during the past few days.
While top investor Daniel Sparks acknowledges that Nvidia remains head and shoulders above the competition, he’s planning on taking a step back in the year ahead.
“I’m not buying Nvidia stock headed into 2026,” declares the 5-star investor, who is among the top 1% of stock pros covered by TipRanks.
Sparks lists three main reasons why Nvidia won’t be on his holiday shopping list this year.
The first is its dependency on a small group of customers. Sparks cites the company’s latest quarterly report, during which it shared that one direct customer accounted for 22% of total revenue. All told, four of Nvidia’s clients account for more than 60% of total sales.
Another one of Sparks’ concerns revolves around increasing competition, and the investor points out that some of Nvidia’s customers are looking for alternatives. For instance, Sparks notes that both Alphabet and Amazon are developing their own chips.
Rounding out Sparks’ trio of trepidations is NVDA’s valuation, which has a price-to-earnings ratio of roughly 45x. The investor notes that this is much higher than “more diversified tech giants” such as Alphabet, Amazon, and Microsoft, all of which are in the low thirties.
Though he emphasizes that there’s plenty to like about Nvidia, for Sparks, the price just isn’t right.
“Has the stock soared too high, making shares unattractive even though the business is firing on all cylinders? I think so,” adds Sparks. (To watch Daniel Sparks’ track record, click here)
That’s not exactly a popular opinion on Wall Street, however. With 39 Buys and just 1 Hold and 1 Sell, NVDA cruises to a Strong Buy consensus rating. Its 12-month average price target of $263.58 would translate into gains just shy of 40% in the year ahead. (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.