It’s been a wild and crazy ride for Nvidia Corporation (NASDAQ:NVDA) over the past few years, as the company has harnessed the raging power of AI to reach astronomical heights. Its share price has risen some 1,170% over the past three years, and Nvidia currently sits on the thrown as the world’s most valuable publicly-traded company.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Nvidia has earned its top perch by dominating the data center market, supplying the hardware that has helped to turn AI dreams into reality. While the company’s revenue growth is starting to come down from the triple-digit figures of quarters past, Nvidia continues to deliver solid sales and earnings numbers.
For instance, in its most recent Q2 Fiscal 2026 quarterly report, Nvidia enjoyed record-breaking revenues of $46.7 billion – up 56% year-over-year – along with a GAAP gross margin of 72.4%. The company is guiding for (yet) more growth up ahead, expecting $54 billion (plus or minus 2%) in Q3 – a figure that does not include any H20 shipments to China.
While things have certainly been swell, top investor James Foord spots some trouble lurking on the horizon.
“With NVDA stock still priced for perfection, even modest revenue hits or margin compression could spark a major selloff,” worries the 5-star investor, who is among the top 2% of investors covered by TipRanks.
The China issue is particularly concerning for Foord, who notes that the company has recently accused Nvidia of violating anti-trust laws. This comes on the heels of the 15% export tax that the company must pay the U.S. Treasury on sales to China, along with efforts by the Chinese government to discourage domestic firms from purchasing Nvidia’s wares.
Foord wouldn’t be surprised if China exports do resume for the Q3 period, however, he does worry that these might not surpass the otherworldly expectations the market has for Nvidia.
“Could Nvidia’s next earnings be the first miss since the AI cycle started?,” he wonders.
Moreover, the investor points out that AMD is offering high-performing chips that rival those of Nvidia – and at cheaper prices. This could very well begin to pressure Nvidia’s margins going forward.
Though he also thinks that NVDA’s share price could move higher still, Foord is electing to look for greener pastures elsewhere.
“Nvidia’s dominance isn’t disappearing overnight, but the dual risks of China headwinds and AMD’s momentum create a much less comfortable setup for shareholders,” sums up Foord, who is rating NVDA a Sell. (To watch Foord’s track record, click here)
Foord’s view is not exactly a popular one on Wall Street. With 35 Buys far outshining 2 Holds and 1 Sell, NVDA cruises to a Strong Buy consensus rating. Its 12-month average price target of $211.36 implies gains approaching 25% in the year ahead. (See NVDA stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Source link
