Nvidia (NASDAQ:NVDA) heads into its Q3 earnings this week with soaring expectations, leaving investors wondering how much longer its incredible streak of triple-digit year-over-year growth can persist. While the company has projected an impressive $32.5 billion in revenue for Q3, this figure signals a deceleration in quarter-over-quarter growth.
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Ahead of the print, top investor James Foord suggests it may be time to step away from Nvidia, citing a mix of macroeconomic factors and company-specific concerns.
“NVDA faces competition, potential slowing AI demand, and bearish technical indicators,” writes the 5-star investor, who sits in the top 4% of TipRanks’ stock pros.
The recent re-election of Donald Trump adds another wrinkle to consider. Trump introduces fresh variables, with unresolved questions surrounding the potential impact of his administration on regulations, trade, and energy costs.
However, Foord also sees potential upsides for Nvidia in the evolving political landscape. He highlights factors such as reduced regulatory pressures and the prospect of more favorable financing conditions under the new administration, which could bolster Nvidia’s prospects.
“Most of the large investments in Data Center build-outs are being financed through debt, so a more favorable environment, i.e., lower rates should allow this AI build out to continue, perhaps even expand,” the investor opined.
Foord also dismisses concerns that trade barriers will lower margins, arguing that inelastic demand for Nvidia products would effectively allow the company to pass along any cost increases onto consumers.
And yet, the investor points to a number of other concerns that give him pause. For starters, the market expects great things from Nvidia, and satisfying these thirsty projections is never easy.
“At this point, it’s going to take a big surprise to please investors,” Foord argues, adding that the “big focus” will be the Blackwell chips and their outlook for 2025.
In addition, the recent misses of other industry firms such as ASML and Applied Materials could be evidence that demand is slowing down.
“I wouldn’t be surprised to see Nvidia go the same way as the other chipmakers ahead of earnings next week,” says Foord.
Another sign that things could be about to head downwards is the net outflows from insiders and institutional investors in Q3.
“Have the institutions timed the top well?” asks the investor. Clearly believing that they have indeed, Foord rates NVDA shares a Sell. (To watch Foord’s track record, click here)
Foord’s pessimism seems to be quite the outlier. With 39 Buy and 3 Hold ratings, NVDA enjoys a consensus Strong Buy rating on Wall Street. Its 12-month average price target of $163.26 suggests ~15% upside from current levels. (See NVDA 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.
