By Knox Ridley
Publication Date: 2026-05-01 00:00:00
In last week’s report, we announced that we are significantly trimming our Nvidia position, a stock we have often held as a top-three holding since 2021. The rationale for this pivot rests on a shifting landscape within the AI trend toward inference, and how that shift will pressure Nvidia’s pristine positioning.
The numbers back it up. Per TrendForce, GPU-based AI servers will account for 69.7% of shipments in 2026 with ASIC-based servers rising to 27.8%. This is happening while a reported one-quarter delay on Rubin, Nvidia’s next-gen GPU platform, lands at exactly the wrong moment. The hardware moat that powered the first phase of Nvidia’s ascent is becoming less absolute, and with it, the case for premium pricing and 70% gross margins.
This thesis is reinforced by technical analysis, which suggests that Nvidia, as well as the broader market, is approaching a meaningful top. While that top is likely to be a correction within a much larger uptrend, it exposes investors to a level of risk we have not experienced in recent years.
In this report, we take a deeper look at the technical scenarios, which suggests that Nvidia’s latest high is shaping up to be a potential bull trap. That view is corroborated by the broader semiconductor complex. Specifically, the failure of other key sub-sectors to confirm the move higher.
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