From Nasdaq: 2025-04-22 03:36:00

Investors are captivated by the potential of artificial intelligence (AI), which could add $15.7 trillion to the global economy by 2030. Nvidia leads the charge with its AI-GPUs, boasting a GAAP gross margin of 78.4%. However, recent price target cuts by Wall Street analysts signal a potential downturn for the tech giant.

A potential hit of up to $5.5 billion tied to exports of high-powered chips to China has led to price target cuts for Nvidia. The company faces competition within AI-accelerated data centers and from internally developed AI-GPUs by its top customers, which may impact its market dominance.

Nvidia’s GAAP gross margin has declined in recent quarters, reflecting increased competition and decreased AI-GPU scarcity. The company’s rapid product replacement cycle may lead to diminishing returns for buyers, impacting Nvidia’s long-term growth potential.

History shows that every next-big-thing technology eventually faces a bubble-bursting event. With AI still in its early stages, Nvidia’s stock could be at risk. While the company has benefited from AI’s rise, overestimation of its adoption and utility may lead to a correction in price targets.

Investors considering Nvidia should weigh the risks associated with the company’s product cycle and market saturation. While the potential for growth remains, recent developments suggest a need for caution. Wall Street analysts have lowered price targets, indicating a shift in sentiment towards the tech giant.



Read more at Nasdaq: Prediction: 8 Wall Street Analysts Lowered Nvidia’s Price Target Last Week — and This Is Just the Beginning