After an impressive run in 2024, powered by the artificial intelligence (AI) boom, Nvidia’s (NASDAQ: NVDA) stock price seems to be cooling off compared to general market sentiment.
In fact, Nvidia ended the latest trading session relatively flat compared to other equities, which showed positive momentum after the Federal Reserve’s interest rate cut decision. Specifically, NVDA closed the day valued at $116, down 1.5% over the 24 hours.
In a weekly timeframe, the semiconductor giant has dropped 0.5%. Despite surging 140% in 2024, the stock is trading 17% below its all-time high.
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Given that Nvidia shares have been instrumental in dictating the trajectory of the technology sector, the recent performance raises questions about whether the stock’s momentum has subsided. The current trading pattern compliments concerns by several market players who believe the NVDA has been trading in a bubble.
Analyysts outlook on Nvidia stock
In the meantime, some market experts argue that Nvidia remains attractive due to strong fundamentals, driven by demand for its AI chips and consistent earnings beats.
One such analyst is William Blair, whose experts believe there is still more upside for Nvidia stock and note that it’s not too late for investors to get involved. In an investor note shared on September 18, Blair rated NVDA as an “outperform,” citing the company’s potential for continued dominance in the AI space. The experts noted that Nvidia’s data center revenue is expected to double in fiscal 2025 after tripling in fiscal 2024.
Andrew Chang from S&P Global Ratings shared a similar outlook and reiterated that Nvidia shares have more room to climb. His forecast is mainly based on CEO Jensen Huang’s comments about the high demand for Nvidia chips, especially Blackwell. Chang sees further upside for Nvidia in the next 12 months.
“It just confirms our view that we have strong runway for at least the next 12 months. <…> All of these are great data points that, at least for the next 12 to 18 months, things look great,” Chang said.
At the same time, Chang acknowledged that Nvidia may face headwinds if its prominent customers choose to cut ties. Notably, some analysts have warned that Nvidia customers like Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) could seek competitors or develop their chips, eating into the company’s dominance.
“Ultimately, if Oracle, if Microsoft, if Amazon don’t see the ROI that they expect, they’re going to cut orders. So hyperscale, demand volatility is something that really concerns us,” Chang said.
On the flipside, Citi (NYSE: C) analyst Atif Malik suggested that the AI momentum might be ending, and Nvidia’s dominance in the space is likely to be impacted by growing competition.
According to Malik, Nvidia will likely be overtaken by technology giant Apple as the leading AI stock by 2025. This analysis is grounded in Apple’s unveiling of its Intelligence feature during the release of the iPhone 16 series.
Wall Street remains bullish on NVDA stock
As Nvidia battles short-term volatility, the consensus from 42 Wall Street analysts at TipRanks suggests that the stock is likely to rally over the next 12 months. The average target price is $152, or an upside of 31% from its current valuation. The high forecast is $200, while the lowest prediction is $90.
Elsewhere, insider selling activity around Nvidia stock could partly explain why the stock is witnessing volatility. CEO Huang has led this selling, offloading shares in almost every trading session in the last few months. One of his latest sales occurred on September 12 and 13, when he sold about 200,000 shares worth more than $20 million.
Additionally, on September 20, 2024, Nvidia’s Executive Vice President and Chief Financial Officer, Colette Kress, sold 59,670 shares, valued at over $7.7 million.
Although insider selling is not illegal, the increasing frequency of these transactions is likely to cause investors to be uncertain about the executives’ short-term outlook for the stock.
In conclusion, while Nvidia’s stock has experienced recent volatility and a pullback from its highs, the overall outlook remains mixed. Investors should remain cautious but optimistic, balancing Nvidia’s promising long-term prospects against potential headwinds in the competitive and rapidly evolving AI market.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
