-
Shares of Nvidia (NVDA) fell another 2.23% on Friday and remain negative for the year despite massive spending plans from NVIDIA’s largest customer.
-
NVIDIA currently trades at just over 23 times forward earnings.
-
Wall Street is worried about competition: Broadcom AI revenue soared 74% to $6.2B as competition intensified, while AMD data center revenue hit $5.4B.
-
A recent study found that there’s one habit that can double Americans’ retirement savings and take retirement from a dream to a reality. Read more here.
It’s the paradox that keeps Wall Street analysts awake at night: Tech giants are pouring $700 billion into artificial intelligence infrastructure, but NVIDIA (NASDAQ: NVDA ) stock has gone cold. A Bloomberg headline on Friday captured the point perfectly: “Nvidia shares fall even as Big Tech invests heavily in artificial intelligence.” The stock, considered the ultimate beneficiary of artificial intelligence, saw limited gains while its customers announced a record spending spree.
The numbers tell a story that seems disconnected from reality. Nvidia just released its year-to-date returns negative It was 1.98% as of Friday. The stock has been essentially flat over the past month meta platform (NASDAQ: META), letter (NASDAQ: GOOGL ) and Amazon (NASDAQ: AMZN ) have announced AI infrastructure buildouts that would make a small country jealous.
Prediction markets tell the same story. Polymarket traders see only a 35% chance of Nvidia closing above $190 in February. VW expects the stock to trade in a range of $185 to $190, which isn’t exactly what you’d expect from a company at the center of a $700 billion spending spree.
If you’re looking for reasons for weakness, investors can point to a number of reasons.
Insider selling has been consistent. Chief Financial Officer Colette Kress sold about 164,000 shares in 60 transactions in three months. Executive Vice President Ajay Puri liquidated 438,973 shares worth approximately $80.8 million. Director Mark Stevens sold 572,500 shares for approximately $103.7 million. However, I don’t think this level of (usually) planned sales is unusual for a company of NVIDIA’s size.
The competitive threat is real. When an AI “brain” reaches a certain size, competitors will emerge and hyperscalers will do their best to diversify.
Broadcom (Nasdaq: AVGO) just reported that fourth-quarter artificial intelligence semiconductor revenue increased 74% year-over-year to approximately $6.2 billion, and first-quarter revenue is expected to reach $8.2 billion as hyperscale enterprises invest in custom chips. Since the fourth quarter, Broadcom executives said their business has continued to accelerate. Broadcom’s design services are crucial to Google’s TPU. Third-party data shows that most of the AI processors deployed by Google last year were TPUs, not NVIDIA GPUs.
Alphabet’s chief technology officer casually mentioned that their “real secret sauce” is co-designing hardware, models and infrastructure in-house. When your largest customers also become your competitors, margin pressure arises.
AMD AMD’s (NASDAQ: AMD ) data center business reached $5.4 billion in the fourth quarter, up 39% year over year, driven by what CEO Lisa Su called “rapid expansion of the data center artificial intelligence business.” Su raised the long-term growth rate for the company’s data center products.
We were running live commentary and analysis on Arista’s earnings Thursday afternoon when the company’s CEO said on a conference call:
“A year ago, it was almost 99% NVIDIA, right? Today, when we look at our deployments, we see about 20%, maybe a little more, 20%-25%, where AMD is becoming the accelerator of choice.
In these scenarios, Arista is the obvious choice because they are building best-of-breed building blocks for NIC, network, IO, and they want open standards rather than a complete vertical stack from one vendor. So you’re right to point that out, AMD, especially. “
Arista only sees one part But those comments and concerns about NVIDIA losing market share were enough to send the company’s stock price down 2.23% in yesterday’s trading.
Yet despite all this, NVIDIA appears to be more resilient than you might think. A quarter ago, Wall Street expected sales of $6.81 in fiscal 2027, the year NVIDIA is currently in. Today, that number has risen to $7.74.
Given how consistent capital expenditures are across every major hyperscaler provider, would you be shocked if earnings end up exceeding $9 per share this year?
This may be what is currently dragging down Nvidia’s stock price. Currently, they trade at about 23 times forward earnings. The next wave of earnings upgrades could easily lead to higher P/E ratios as it becomes clear how much room for growth remains in the coming years.
For example, if NVIDIA’s next report on February 25 triggers a wave of upward revisions, and we find Wall Street’s expectations for fiscal 2027 earnings per share are closer to $9, then we find ourselves heading into the summer with NVIDIA stock trading near $225 per share if the stock is re-rated to 25 times fiscal 2027 earnings.
That would represent an increase of about 23% from where NVIDIA currently trades. Wall Street estimates are It is currently even higher than this number. UBS just raised its price target to $245, citing strong GPU production expectations in 2026. Wall Street’s current price target is $253.88. It looks like we’re just waiting for the next upward correction to kick-start the next move in the stock price.
Most Americans vastly underestimate how far they will need to retire and overestimate how ready they are. But data shows that people who have a habit will have more than double Savings for those who don’t.
No, it has nothing to do with increasing your income, saving, cutting coupons, or even reducing your lifestyle. It’s simpler (and more powerful) than any of them. Frankly, it’s shocking that more and more people aren’t adopting this habit, considering how easy it is.
