News: Nvidia stock could potentially crash from $120 to $40 due to competition and risks. Negative

From Nasdaq: 2024-09-03 00:17:15

Nvidia stock (NASDAQ:NVDA) could potentially fall from $120 to $40 in a few years, considering it was at $28 just over a year ago. High growth due to AI demand has boosted stock value, but risks remain. Competition from AMD and Intel could lead to declining margins, impacting revenue and stock price.

Nvidia’s revenue growth is expected to cool off, with sales projected to grow by 30% next year, down from the current 122%. The AI industry’s weak economics and FOMO investments could slow down growth and hit Nvidia’s earnings. Large AI deployments could lead to declining GPU demand, impacting Nvidia’s future performance.

Nvidia’s margins are at risk of declining to 35% as competition in the chip market intensifies. Increased competition from AMD and Intel, along with big tech players doubling down on AI, could make Nvidia’s high margins unsustainable. A decline in net income could lead to a decrease in earnings and a lower P/E multiple, potentially bringing Nvidia stock down to $45 per share.

Investors should consider the potential downside of Nvidia’s volatile stock, with risks such as cooling revenue growth, declining margins, and increased competition impacting future earnings. While a case can be made for long-term gains, the possibility of a correction in Nvidia stock should not be ignored. For consistent outperformance, investors may consider the Trefis High Quality (HQ) Portfolio.



Read more at Nasdaq: Could Nvidia Stock Crash To $40?