Nvidia (NASDAQ:NVDA) has been the talk of the stock market over the past year and a half. With a series of blockbuster earnings reports fueled by the insatiable demand for its top-tier AI chips, Nvidia’s dominance has been a driving force behind the bullish sentiment propelling market gains. Such has been the magnitude of its success that it now poses a threat to Apple’s standing as the world’s second most valuable company.
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The question for investors mulling over an investment in Nvidia right now, is can anything derail the semi steamroller? Yes, something certainly can, says investor ValueAnalyst.
“Nvidia’s revenue growth rate is declining,” says ValueAnalyst, a statement that appears jarring considering Nvidia’s latest quarterly readout featured year-over-year top-line growth of 262%. However, the investor points out that Nvidia guided for FQ2 revenue of $28 billion, a figure that represents YoY growth of ‘only’ 107%, thereby indicating deceleration. The same is true on a sequential basis, with quarter-over-quarter revenue growth expected to slow from 18% in Q1 to 8% in Q2. “Even though the year-over-year growth rate is still high, I emphasize that the growth rate is declining, and I expect it to continue to decline in the coming quarters,” says ValueAnalyst.
Perhaps more importantly, Nvidia needs to watch its back as rival Advanced Micro Devices (NASDAQ:AMD) is preparing the ground for an assault with its MI300X accelerators. ValueAnalyst suggests Nvidia investors pay attention to a crucial comment recently made by a senior Microsoft executive. Scott Guthrie, the executive VP of Microsoft’s Cloud and AI group, stated that AMD’s MI300X accelerators are currently the “most cost-effective GPU out there right now for Azure OpenAI.”
The statement, says ValueAnalyst, “supports my argument that AMD MI300X poses a material competitive threat to Nvidia’s dominance in data centers.”
While ValueAnalyst concedes that over the coming weeks, the shares’ outperformance could continue, because “competitive analysis points to a closing gap between Nvidia and its competitors,” ValueAnalyst cautions investors “to not chase the stock.”
Based on all of the above, ValueAnalyst rates NVDA shares a Sell. (To watch ValueAnalyst’s track record, click here)
Contrarian views make the investing game interesting, and looking at the Wall Street view, ValueAnalyst’s take is certainly that. In sharp contrast, the analyst consensus rates the stock a Strong Buy, based on a mix of 37 Buy recommendations against 3 Holds. Going by the $1,197.64 average price target, a year from now, shares will be changing hands for a 9% premium. (See Nvidia 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.
