Just after the GTC 2024 conference.
Since the beginning of this year, NVIDIA shares have risen in price by 87%, and so far the upward trend shows no sign of changing, but some analysts are warning investors that this state of affairs cannot continue forever. At the very least, ARK Invest's Cathie Wood is concerned that the cloud computing industry as a whole is betting heavily on increasing accelerator shipments and purchases without seeing a proportionate increase in revenue from software solutions. According to the expert, sooner or later NVIDIA clients will stop purchasing accelerators, and this will lead to overproduction of specialized chips. This risk is especially pronounced in the cloud computing segment, since core customers account for more than half of NVIDIA's total server revenue.
Image Source: NVIDIA
At the same time, NVIDIA's competitors and customers themselves are developing their own chips, so the market need for products from this brand will at some point begin to decline. Mizuho analysts see an alarming trend in the dynamics of the stock market: investors are beginning to buy securities of other companies in the technology sector against the backdrop of the success of NVIDIA shares, but in their case such pronounced dynamics of financial indicators are not observed. This may at some point lead to disappointment and the sale of “related” assets. In fact, even NVIDIA shares may decline in price after the GTC event in the second half of the month, since a number of investors will prefer to take profits at this point and sell off some of their shares. However, by the end of the year, NVIDIA's stock price will still exceed current levels, according to Mizuho.