Nvidia’s last trading sessions on Wall Street will not leave its investors with a happy memory, far from it. The price of its shares has fallen by 15% during this period and has caused its capitalization to drop by approximately $465 billion in a process that led to the largest loss of stock market value of a company in a single day, nearly 280 billion dollars. At mid-session on Wall Street on Wednesday, the company recovered 1.6% on the stock market.
Still, Nvidia continues to remain one of the most bullish companies on the Nasdaq so far this year. So far this year, its shares appreciate by 120%which allows it to retain the title of company that appreciates the most in the technological selective, very far from the increases of 62% added by ARM Holdings, the second most optimistic company in the technological selective.
“Investors they wonder If the future revenues of the major technology and IT companies in the cloud justify the billions of dollars invested in artificial intelligence“, are raised by BlackRock, while warning of the risks of stagnant revenue growth or slow adoption of AI.
“Good companies are not always great investments if the margin of safety is small,” Fidelity warns, while stressing that “the risk-reward profile is tilted to the downside” and that “the company “It is increasingly difficult to beat forecasts and it is increasingly unlikely that the market will tolerate setbacks.”.
There are underestimated risks to the scale and pace of generative AI adoption.
“I think there is a risk that we are close to the peak of the first phase of the deployment cycle, although it is very difficult to predict the exact timing. The market has so far been counting on the massive deployment of AI infrastructure, driven by at the expense of some hyperscalers who fear being ousted from their technological leadership position, will continue unabated. However, There are underestimated risks to the scale and pace of generative AI adoption.. While GPUs are undoubtedly well positioned to meet the training needs of large frontier models, These devices might be less necessary when we move to the model inference phase.“, explains Hyun Ho Sohn, from the same firm.
An intact note
Analysts’ confidence in its positive evolution on the stock market over the following twelve months remains intact. Not only because its stock valuations have increased since the announcement of its results, but also because, if the forecasts come true, it would fight with Apple in 2025 to become the largest listed company in the world. According to the market consensus projections collected since BloombergNvidia to capitalize in 2025 $3.6 trillionvery close to the 3.7 that experts project for Apple. And the upside potential that experts attribute to it exceeds 35% after the latest recorded declines.
It’s no surprise considering that in four of the last five years its shares have appreciated by more than 115%.
And the strong demand for hyperscalerswhich create capacities for the future, the high expenditure of start-up AI that build pioneering models, and Eliminating bottlenecks in packaging technologyare some of the assets that analysts are counting on the company led by Jen-Hsun Huang to rely on to achieve these goals.
Of course, in addition to the growing demands to meet analyst forecasts, Nvidia will have to deal with the complications of a subpoena from the Justice Department that is conducting an open monopoly investigation into the chip company.
