From Nasdaq: 2024-06-24 00:05:44

Nvidia (NASDAQ: NVDA) has become the world’s most valuable company with a $3.3 trillion valuation, surpassing Microsoft and Apple due to surging demand for AI-driven GPUs. Sales more than tripled in Q1 FY’25 to $26 billion, with a strong outlook guiding for $28 billion in revenue for Q2 FY’25.

However, despite strong growth, competition from rivals like AMD and Google in the AI chip market may challenge Nvidia’s current dominance. With concerns about easing GPU demand post-initial AI model training and revenue concentration with big customers like Microsoft and Meta Platforms, risks for the company exist.

Investors should consider the potential risks despite Nvidia’s projected sales doubling this year. Valued at $89 per share, our analysis suggests the stock may be overvalued. Meanwhile, the Trefis Reinforced Value Portfolio has consistently outperformed over the years, showcasing strong returns compared to the S&P 500.

In terms of stock performance, NVDA has seen significant gains over the past few years, reaching around $135 from $13 in early 2021. Returns were inconsistent, with a 125% increase in 2021, followed by -50% in 2022, and a 239% spike in 2023. Comparatively, the S&P 500 saw more stable returns over the same period.



Read more at Nasdaq: Revisiting Nvidia Stock’s Risks As Valuation Tops $3.3 Trillion