Nvidia Corp. (NASDAQ: NVDA) stock has sold off slightly lately. However, it is up 78% year to date and over the past year by 233% to $880. One Wall Street analyst expects it to drop to $620. Recently, Nvidia stock did stumble.
Gil Luria, senior software analyst at D.A. Davidson, has a Hold rating on the shares, which is considered the equivalent of a Sell at many firms. He says the company has “pulled forward demand.” That means that customers have ordered chips now that they will use later. This also means that 2025 customers will have a large enough inventory to slow orders of Nvidia chips. The argument is that Nvidia’s revenue could even decline quarter over the same quarter of last year.
Luria also believes that Nvidia’s challenge is that companies, including Microsoft Corp. (NASDAQ: MSFT) and Amazon.com Inc. (NASDAQ: AMZN), do not want to be caught if there is a shortage of Nvidia chips. It is better to keep some reserves.
Another argument beyond that of D.A. Davidson is that competitors that currently trail Nvidia in technology will begin to catch it. Advanced Micro Devices Inc. (NASDAQ: AMD) is at the top of this, but even if it is relatively weak, giant Intel Corp. (NASDAQ: INTC) will stake out a spot in the sector.
The most significant case against Nvidia is the one used against many companies whose shares doubled or tripled in price over one year. An ounce of difficult news can trigger a sell-off.
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