Nvidia (NVDA) shares are under pressure this week, sliding more than 3% ahead of its highly anticipated Q3 earnings report on Wednesday. The decline reflects growing investor caution around the chipmaker’s sky-high valuation amid concerns about a potential AI bubble and high expectations.
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Importantly, NVDA’s results are seen as a litmus test for the entire AI sector. The recent dip in Nvidia and other AI stocks, such as Oracle (ORCL), is due to investors’ concerns about rising data-center costs and slowing enterprise demand.
What’s Behind the Market Jitters?
Nvidia has been the leader of the AI boom, with its stock up over 37% year-to-date. However, investors are now worried about whether the tech giant’s fundamentals can justify its premium price tag.
Currently, analysts expect Nvidia to report $1.26 per share in Q3 earnings and $54.9 billion in revenue, both up over 50% from last year. With expectations so high, any sign of slowing momentum could trigger a sell-off.
Adding to the jitters, major investors like SoftBank (SFTBY) and Peter Thiel have recently trimmed their holdings of Nvidia stock. The exits have fueled speculation that some insiders may see limited upside from current levels.
Also, tech sector caution continues today. Two of Nvidia’s key customers, Microsoft (MSFT) and Amazon (AMZN), were downgraded by Rothschild & Redburn analyst Alexander Haissl, warning that generative AI may not be as profitable as expected.
Is Nvidia a Buy, Hold, or Sell Now?
On TipRanks, NVDA stock has received a Strong Buy consensus rating, with 37 Buys, one Hold, and one Sell assigned in the last three months. The average Nvidia stock price target is $243.09, suggesting an upside potential of 32.09% from the current level.
