Nvidia’s narrative is beginning to resemble less of an unstoppable rocket and more like a rising jet that is experiencing turbulence. The company has been the central AI chip representative for years, which has been posting record revenues and a generous market cap that very few imagined.
But now that Citi is cutting its target price and competitors such as Broadcom and Chinese chipmakers are able to sense opportunity, investors are reasonably asking if the Nvidia rally has finally run out of steam or not.
Nvidia is definitely still the key player in AI infrastructure, but the days of easy stock gains are behind it. Investors must begin treating this as an actual business with risks, rather than as a face of AI hype.
Nvidia just reported a 56% year over year jump in revenues, its Blackwell chips are more popular than ever, and AI infrastructure spending is on track to develop into the trillions by the end of the decade.
On the other hand, competition has become more real than speculative. Broadcom’s impending $10 billion chip acquisition, hyperscalers constructing in-house processors, and China pushing alternative-domestic replacements, all conspire to threaten Nvidia’s grip on the market.
However, the new sentiment shift is emphasized by Citi’s discreet stance, where the big picture reminds all investors that even market leaders must bow to price pressure and geopolitical risks. Also, Nvidia would remain to be a critical element for AI’s backbone, but it would have to swallow lower margins and a slower growth rate as compared to its historical highs.
Eventually, Nvidia still appears to be the winner, though maybe not the one it used to be. Also, bets on the stock today should be toughened, as the AI revolution is for real and Nvidia is at its center, but competitors and geopolitics are now taking their toll.
The stock is not necessarily a sell, but it’s no longer an easy “buy at any cost” narrative either. For the long-term investors, Nvidia is still strong, but even titans do face some reality check as well.