Nvidia's Risk-Reward Proposition Is Much Less Favorable, According to 1 Wall Street Analyst

When you've been connected a tally similar Nvidia (NASDAQ: NVDA) has implicit the past fewer years, it's astir ever due to the fact that investors spot monolithic maturation ahead. For a institution positioned arsenic the picks-and-shovels play for the full artificial quality (AI) industry, galore inactive deliberation the entity is the bounds for the AI spot king.

However, 1 Wall Street expert thinks that whitethorn nary longer beryllium the lawsuit and is downgrading Nvidia from a bargain standing to a clasp with nary terms people listed.

While Summit Insights expert Kinngai Chan expects Nvidia to support beating statement estimates successful aboriginal net reports, particularly aft strong fiscal 2025 fourth-quarter results, he's acrophobic "NVDA's outperformance and maturation could decelerate into 2HFY26 arsenic proviso of NVDA's GPUs catches up to manufacture demand."

Chan besides pointed retired a larger contraction successful margins than expected owed to the institution expanding accumulation of its next-generation Blackwell chips. The emergence of DeepSeek, a almighty AI chatbot that was supposedly built astatine a fraction of the outgo of fashionable names similar ChatGPT besides seems to beryllium connected Chan's mind. He noted that much businesslike AI grooming and the quality to make AI programs with little precocious computing volition adversely interaction Nvidia connected a medium- to semipermanent basis.

Chan makes immoderate bully points here. While manufacture leaders usually find ways to accommodate to caller challenges, determination is inactive a batch investors don't cognize astir AI and its imaginable obstacles. There could beryllium near-term risks from the Trump medication perchance pursuing done with much aggravated export controls connected chips, truthful caution is warranted with Nvidia, arsenic good arsenic with different ample AI stocks that person seen their valuations soar.

Before you bargain banal successful Nvidia, see this:

The Motley Fool Stock Advisor expert squad conscionable identified what they judge are the 10 champion stocks for investors to bargain now… and Nvidia wasn’t 1 of them. The 10 stocks that made the chopped could nutrient monster returns successful the coming years.

Consider when Nvidia made this database connected April 15, 2005... if you invested $1,000 astatine the clip of our recommendation, you’d person $765,576!*

Now, it’s worthy noting Stock Advisor’s full mean instrumentality is 890% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss retired connected the latest apical 10 list, disposable erstwhile you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns arsenic of February 24, 2025