'They won't keep buying': Three Wall Street analysts explain why Inventec's good times are over

• Three Wall Street analysts say Nvidia's best days in the stock market may soon be behind it.

• They warned that the chipmakers' rally could be interrupted by weakening demand and overly high expectations.

• One analyst estimated that demand could fall as soon as 2026, although Koon's expectations for growth continue.

According to several Wall Street analysts, INVISTA's best days may be behind it - and the stock's meteoric rise in the AI boom may begin to stumble this year.

So far this year, Nvidia, led by Hwang, has had a stellar year, beating earnings estimates every quarter. The company's market capitalization now exceeds that of Alphabet and Amazon, and it just replaced Tesla as the top stock for retail investors.

But DA Davidson analyst Gil Luria thinks the chipmaker's huge gains could soon come to an end. He thinks Nvidia's shares could fall 20% by the end of the year, and he joins a number of other strategists who are skeptical of Nvidia's dazzling stock market valuation.

In a recent interview with BNN Bloomberg, Luria said INVISTA is unlikely to keep growing at a high rate because companies investing in artificial intelligence are bound to dry up eventually. He gave the stock a "hold" rating in a note with a price target of $620, the lowest estimate on Wall Street.

"A lot of its big customers ...... are stocking up on its GPU products," Luria said, pointing to NVIDIA's biggest buyers of AI chips, such as Microsoft and Amazon." But as they reach the capacity they need, they won't keep buying them for years to come, which is what current INVIDIA estimates imply."

Nvidia's earnings per share for the 12-month period ending in the first quarter of 2025 are expected to soar to $24.75, according to Bloomberg. That's nearly double last year's adjusted EPS of $13.

DA Davidson also expects demand for Nvidia's products to decline by 2026.

"The higher it goes up this year, the more it will go down next year," Luria warned.

Other commentators have also warned about Nvidia's sky-high valuation. Deutsche Bank maintained a "hold" rating on the company's stock in a recent report, noting that the chipmaker is already overpriced. Analysts have given the stock a target price of $850 per share, which implies a downside of 5% from where it was before.

"We remain impressed with NVDA's pace of innovation and continue to see the company as an undisputed AI leader, but also believe that this view is still well known (see last year's impressive rally) and is well reflected in its already This is fully reflected in its already premiumized valuation.

NVIDIA also faces the risk of massive competition in the artificial intelligence space. Brian Colello, an equity strategist at Morningstar, said no company has yet dominated the market like Nvidia, but other chipmakers such as Microsoft and Amazon are sure to "rise to the occasion."

"Cloud computing companies may simply look at how much money they're spending on Nvidia GPUs and then ...... try to build those chips in-house to run specific AI workloads," Colello said in an interview with Business Insider." Nvidia has huge operating margins and the best profitability. So that really gives a lot of companies an incentive to try to get in the game."

Nvidia's stock could also take a hit if the economy enters a slowdown, Corro speculated. If customers like Microsoft cut back on GPU spending, then Nvidia could be in trouble, as investors already have high expectations for the company's stock.

Morningstar gives the stock a three-star or neutral rating, with a price target of $910. That means the stock will trade about flat for the rest of the year, with Nvidia shares trading around $900 this week.

Nvidia's bearishness is certainly in the minority, as the chipmaker continues to rise, with shares up 86% from the start of the year. NASDAQ Resonance data shows that investors will be watching the company's upcoming earnings report on May 22nd, with expectations for earnings of $5.13 per share.

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