According to analyst Gil Luria from DA Davidson, Nvidia’s stock may not continue to rise indefinitely. Luria predicts a potential drop of up to 20% in Nvidia shares in the coming years due to anticipated lower demand for Nvidia GPUs and increased competition. While Nvidia recently reported record-breaking revenue of $26 billion in the first quarter, largely due to increased spending by its biggest customers on GPU products, Luria believes this trend will not continue.
Luria estimates that Nvidia’s stock could fall to around $900 by 2026, representing a drop of about 14% from its current levels. He also suggests that a drop of up to 20% is feasible over the next 18 months. Despite the company’s recent success, Luria’s long-term outlook for Nvidia is more pessimistic than many anticipate. He points out that major customers like Meta, Alphabet, and Amazon are already developing their own AI chips, which could potentially reduce their dependence on Nvidia in the future.
As bullish analysts continue to praise Nvidia’s performance, Luria remains cautious and warns of a potential long-term decline in the company’s stock. He plans to assign a “sell” rating to the stock once Nvidia’s largest customers start to reduce their involvement with the company. Despite Luria’s warnings, investors have remained optimistic, causing Nvidia’s stock to reach an all-time high after the first-quarter results were announced.
Overall, Luria’s analysis suggests that while Nvidia has been performing well in the short term, there are potential challenges on the horizon that could impact the company’s stock value in the future. As competition in the GPU market increases and major customers explore alternative options, Nvidia may face obstacles that could lead to a decline in its stock price over the next few years. Investors will need to carefully monitor these developments to make informed decisions about their investments in Nvidia.
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