While Nvidia (NVDA) has been an explosive ride up for quite some time now, there are signs that that ride is starting to level out. In fact, one analyst even came out with the notion that there could be some short-term declines ahead for the chip stock. You’d never guess it from Tuesday afternoon’s trading, though, as shares jumped over 6% in the session.
Patrick Moorhead, CEO of Moor Insights & Strategy, noted that “any type of hiccup or bad news could mean a selloff.” That was thanks in large part to its explosive rise over the last few months. Now, with investors looking to depart the Magnificent Seven and go find opportunities elsewhere, investors will look for any excuse to sell.
Nevertheless, Moorhead said that he doesn’t see “… anything changing in the data center for Nvidia for the next 12, maybe even 18 months.” Thus, any hiccups that follow may be just that: short-term hiccups that will just be part of owning Nvidia for some time to come.
Regulatory Problems
Meanwhile, Nvidia is facing a growing slate of troubles from regulators, who have already been particularly sensitive to the notion of market competition. Nvidia’s surging popularity may give it an unusual advantage in the field. In fact, it’s currently got around 90% of the artificial intelligence (AI) chip market in its corner.
That has regulators concerned about competition in a market where an almost monopoly has formed. Addressing these issues will be hard since Nvidia basically just succeeded rather than doing anything anti-competitive. However, it is already working on a response by engaging public policy employees in a Washington office to try and head off such issues. Still, with an election cycle firing up in earnest, who knows how that may turn out? A President Trump might be a lot more kind to business than a President Harris would be.
Is Nvidia a Buy or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 37 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 134.74% rally in its share price over the past year, the average NVDA price target of $144.17 per share implies 34.7% upside potential.
