- Analyst Jay Goldberg remains the sole Wall Street bear on NVIDIA, warning of overreliance on a narrow customer base and elevated spending by key partners like OpenAI.
- Recent trading saw Nvidia stock’s market capitalization fluctuate significantly, with doubts rising about the sustainability of massive investments in its chips.
- Goldberg maintains an ‘Underperform’ rating and a $140 target price for Nvidia stock, citing intensifying competition and potential demand challenges.
- Rivals such as AMD and major cloud companies are developing their own competitive AI silicon, threatening Nvidia‘s market dominance.
Nvidia‘s stock experienced notable volatility, with its market capitalization spiking to $4.76 trillion during intraday trading before closing at $4.39 trillion. This comes as questions mount about the company’s long-term prospects. Analyst Jay Goldberg, who holds the only ‘Underperform’ rating for Nvidia on Wall Street, voiced his ongoing skepticism in a recent podcast interview.
Goldberg expressed concern over Nvidia‘s heavy dependence on customers like OpenAI and described the associated risks. He noted that OpenAI, still operating as a startup, is reportedly planning to spend up to $1 trillion over the next five years. In his view, this ambitious spending may not be sustainable. According to Goldberg, “It’s a really narrow base. It’s like four or five companies are holding the whole thing up.” He also questioned how much of Nvidia‘s future revenue projections rely on the continued growth and stability of OpenAI, suggesting this number is substantial but potentially unreliable.
The analyst also highlighted growing competition. He said that AMD is catching up by developing competitive AI chips and improving its related software, previously considered behind by several years. In addition, major cloud service providers—referred to as “hyperscalers”—are now designing their own AI chips. For instance, Goldberg mentioned the Google TPU as a viable option for large-scale AI workloads, adding that “the competition is real and getting better.”
Goldberg also raised concerns about Nvidia‘s business model. He referenced what he calls a “circular deal,” whereby Nvidia sells computing capacity to customers while also extending them financing. He said, “I think there are signs right now and a growing number of signs that it’s getting harder and harder to generate demand, to pay for demand, to finance demand for all the people who want to buy Nvidia chips.”
While Goldberg credited Nvidia for delivering a positive quarter and solid guidance, he cautioned that the company’s outlook may not be strong enough to offset increasing competitive and economic headwinds. He remains concerned about how long customers can sustain spending billions of dollars each year on Nvidia hardware.
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