Nvidia stock tumbles after yearlong surge

Exclusive by Omer Faruk Bingol— In the past year, Nvidia soared into the ranks of the world's top three most valuable companies with a 227% rise in stock prices. However, recent trends show significant changes. Although the shares peaked at $974, they have now fallen to $871, a 12% drop. This development has sparked discussions in the U.S. stock market, with many speculating that Nvidia's best days might be over.

The American chip manufacturer Nvidia stands out as one of the most discussed companies worldwide. Its extraordinary stock price surge has dominated investment circles, especially the New York Stock Exchange. The company's shares have increased by 227% over the last year, 88% in the last six months, and 66% in the last quarter. After closing 2023 at $495 per share, Nvidia's most recent closing hit $871.

High-profit expectations at risk

Nvidia is gearing up for a 406% growth in earnings per share in the first quarter. The company, declaring $1.41 billion in profits in the last quarter of 2022, managed to boost its profits to $12.29 billion in the final quarter. However, the past month has seen Nvidia's shares moving in unexpected ways. The shares, reaching a peak of $974 on March 8, have since broken their upward trend, starting a horizontal movement.

Stock price levels under lens

In the last four weeks, Nvidia's shares have fluctuated between $850 and $970. The most recent closing was near this range's lower limit. Nvidia has been trading above its 22-day average since the first week of January, but it seems to have dropped below this crucial line in the past week. The 22-day average currently stands at $918, while Nvidia's share price is about 5% lower.

Potential decline in sales

 He forecasts a possible 20% decline in its shares. Luria notes that major chip purchasers like Microsoft and Amazon might cut back on chip buying once they achieve their target capacities, impacting Nvidia's sales through 2026.

Deutsche Bank sets target of $850

Bloomberg data reveals expectations for Nvidia to earn $24.75 per share in the first quarter of 2025, double last year's figure. Nonetheless, Deutsche Bank analysts, warning that the stock might be overvalued, have set a target price of $850 per share. The current stock price exceeds this target by about 2.5%. The analysts consider Nvidia a clear leader in artificial intelligence but believe the market has already factored this into the price.

Competition could negatively impact Nvidia

Brian Colello, a strategist at investment firm Morningstar, also sees Nvidia facing significant risks from competition in AI. He argues that efforts by other chip manufacturers, like Microsoft and Amazon, threaten Nvidia's position. Specifically, a reduction in GPU spending by a client like Microsoft could pose problems for Nvidia. Morningstar has set a target price of $910 for Nvidia's stock, with the company expected to announce its financial results on May 22.