Many investors have been jumping on the Nvidia NASDAQ:NVDA) bandwagon over the past few years, as the AI chipmaker has rapidly grown into the biggest publicly traded company in the world.
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Forget margin or options. Here's how the pros trade NVDANvidia’s earnings reports have become must-see viewing, generally batting cleanup after most other companies have disclosed their quarterly figures. That can lead to an especially sharp spike in buying when other tech companies continue to confirm their growing commitment to AI spending.
That certainly feels like the case this time around, as Nvidia prepares to report its fiscal Q1 2027 numbers next week on May 20th. The company has guided for revenue of $78 billion ±2%, which would represent a year-over-year growth of 77%.
Nvidia has a strong track record of surpassing even the rosiest projections, and there are precious few who would bet against the company doing so yet again. NVDA’s share price is up some 12% over the past five trading sessions, no doubt thanks to the growing excitement.
And yet, long-time NVDA bull and top investor Andres Cardenal has decided that it’s time to turn down the heat.
“Nvidia remains a long-term industry leader, but I am cautious ahead of earnings,” states the 5-star investor, who is among the top 1% of stock pros covered by TipRanks.
Cardenal notes the irony in his lukewarm take, pointing out that NVDA is now trading at a “reasonably valued” forward price-to-earnings ratio of 26x. That is less than AMD (62x), AVGO (38x), and ARM (98X), he adds.
And yet, Cardenal also can’t ignore the concerns of intensifying competition from the major tech companies. The investor explains that custom silicon from hyperscalers such as Alphabet, Amazon, and Microsoft could pressure margins.
Moreover, Cardenal worries that the CUDA software ecosystem, “Nvidia’s key competitive advantage,” is under attack by the Unified Acceleration Foundation (UXL). “The idea is to make AI software hardware-agnostic, allowing developers to switch from Nvidia to AMD or Intel chips without rewriting millions of lines of code,” he explains.
Though Cardenal harbors few doubts about Nvidia’s staying power, he believes that the semiconductor sector is now in a “frothy phase.” That could pose a material headwind for Nvidia, especially if the potential for shifts in the industry chip away at its dominance.
“I am currently neutral on Nvidia over the short term, although I would consider any material correction a strong buying opportunity with a long-term horizon,” concludes Cardenal. (To watch Cardenal’s track record, click here)
Wall Street, for its part, remains fully bullish. With 40 Buys, 1 Hold, and 1 Sell, NVDA enjoys a Strong Buy consensus rating. Its 12-month average price target of $276.41 implies about 25% upside from current levels. (See NVDA stock forecast)
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.