Nvidia (NASDAQ:NVDA) found itself in an unusual spot this past earnings season. Despite delivering another beat-and-raise report, the world’s most valuable company saw little reward from investors. In fact, since reporting results in late February, the stock has pulled back about 14%.
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Trade NVDA with leverageSo, is now the right time to pick up shares of the AI chip giant at a discount?
According to Cathie Wood’s latest move, the answer is clearly no. The ARK Invest CEO seems to be losing patience here; on Thursday and Friday, Wood sold 213,560 NVDA shares through the ARKK, ARKW, and ARKF funds amid a market downturn.
The problem for Nvidia is that it might now be turning into a curious case of having gotten too big for investors to get excited about anymore. As Seaport analyst Jay Goldberg puts it, Nvidia has now become “so big that it is bumping up against the law of large numbers.”
The data presents a “glass half-full/half empty situation.” On one hand, rolling 12-month revenue for data center logic merchant semiconductors has surged, with Nvidia capturing the overwhelming share of that expansion. On the other, its market share appears to have plateaued slightly above 80%. As Goldberg notes, once a company approaches the mid-80% range, incremental gains become harder to achieve. The market may still be expanding rapidly, but the next leg of growth is unlikely to come as easily as before.
Moreover, competition is no longer sitting on the sidelines. AMD and Broadcom are both gaining traction with hyperscalers and top AI labs, while OpenAI has been spreading its bets across multiple chip suppliers. Meta Platforms has followed a similar path, announcing several partnerships in recent weeks. As a result, Nvidia is facing a more competitive environment and has to work harder to secure revenue than it has in years.
“Overall,” Goldberg summed up, “we give the company full credit for its great achievements, but we think the stock will continue to underperform.”
To this end, Goldberg rates NVDA shares a Sell, while his $140 price target implies the stock will shed 16% over the coming months. (To watch Goldberg’s track record, click here)
Goldberg, however, is the lone NVDA bear on the Street. With an additional 41 Buys and 1 Hold, NVDA stock claims a Strong Buy consensus rating. Going by the $273.34 average price target, a year from now, shares will be changing hands for a 63% premium. (See Nvidia stock forecast)
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.