From Yahoo Finance: 2025-05-27 07:05:00

Nvidia’s stock is up 40% in the past year but slightly down year to date due to AI demand concerns and China chip export controls. Analysts are bullish, with an average price target of $162, implying 25% upside. However, questions arise about the stock’s PE ratio, market cap, and potential downside surprises.

Export restrictions have cut Nvidia’s China market share in half, leading to significant losses in sales and inventory for banned H20 AI chips. Competitors like Amazon, Microsoft, and Google are racing to develop their own AI chips, posing a threat to Nvidia’s dominance. Upstarts like Groq are also attracting investors to enter the AI chip market.

Despite strong demand for Nvidia’s AI chips, the company’s gross profit margins are shrinking due to increasing data center costs and complex hardware. Notably, prominent investor Michael Burry has bought put options on the stock, suggesting a bearish outlook. As the market questions Nvidia’s valuation, the company’s earnings report this week will determine if the hype was justified.

Read more: Is the hype train running out of tracks?