NVIDIA finally fell, is it time to buy the dip or run?
Despite NVIDIA's dominant position in the AI chip field, tech giants are actively developing their own chips, which may challenge its position, leaving investors in a dilemma
NVIDIA's global market value highest position lasted only one trading day, with its stock price reversing overnight and falling by 3.45%. The reduction in this upward trend has put investors in a dilemma: is it time to take profits or continue to hold or even increase positions?
As a leader in the AI chip field, NVIDIA has recently performed well, with a market value surpassing Microsoft and Apple at one point, briefly becoming the largest company in the U.S. Since October 2022, NVIDIA's stock price has risen by over 1000%, with a 206% increase in just the past 12 months.
Investors bullish on NVIDIA believe that the company still has room for growth. As the dominant supplier of AI chips, NVIDIA is at the forefront of technological change. Analysts predict that the company's revenue for this fiscal year will double to $120 billion, and is expected to reach $160 billion in the next fiscal year. In comparison, Microsoft is only expected to grow revenue by around 16% this fiscal year.
However, the soaring stock price has also significantly increased NVIDIA's valuation levels, with the forward P/E ratio increasing by 80% since the beginning of this year, which may make NVIDIA more prone to significant pullbacks in the face of adverse news.
Chuck Carlson, CEO of Horizon Investment Services, stated that past performance should not be the driving factor in investment decisions, but for stocks like NVIDIA, it is difficult not to consider it as a factor in investment decisions, as investors may feel the urge to chase the rise.
Optimists point out that NVIDIA's leading position in the AI chip field is a major reason for their optimism about the company. The high performance of the company's chips makes it difficult to replace in AI data centers, and proprietary software frameworks further enhance its competitive advantage.
However, some analysts are cautious about the company's long-term prospects. D.A. Davidson analyst Gil Luria has given the stock a "Neutral" rating with a target price of $90, well below the current level of around $130.
In addition, tech giants such as Microsoft, Meta, and Google are actively building their own AI computing capabilities, which may pose a challenge to NVIDIA's market position. Morningstar analysts believe that leading suppliers like Amazon, Microsoft, and Meta will eventually reduce their reliance on NVIDIA, diversifying the supplier base