After breaking through $700, can Nvidia still rise?
Overnight, after a wave of profit-taking, Nvidia's stock price retreated intraday after breaking through an all-time high of $700, and finally closed down 16%。
Previously, benefiting from the good news that Goldman Sachs, Bank of America and other major banks raised their target prices and Nvidia and Cisco joined forces, Nvidia's stock price closed up more than 4% on Monday, hitting a record high for the third consecutive day.
As of Monday, Nvidia's stock price had accumulated about 30% in a month**, far outpacing the S&P 500 and Nasdaq's monthly gains.
But with the soaring stock price comes the risk of high premiums.
According to FactSet, Nvidia's 14-day Relative Strength Index (RSI) has now reached 85Caught in "severe overbought".。RSI measures the magnitude and speed of movement, and anything above 70 indicates that the stock price is overbought, causing the stock price to rise to a level that cannot be supported by fundamental factors, and generally speaking, the stock price tends to correct downwards after being overbought. The surge in stock prices has also made Nvidia's valuation much higher than other chip stocks, with a dynamic PE of 31 as of Monday4 times, much higher than the industry average of 229 times.
As a result, Rob Ginsberg, an analyst at Wolfe Research, noted in a letter to his clients that investors should not "chase 90 degrees**" and in this case, he would rather opt for partial profit-taking.
Sandeep Gupta, an analyst at Barclays Bank, gave a "bearish report" on Nvidia last week.
In the report, Gupta pointed out that the AI arms race in full swing will eventually come to an end, and when the database is established, user deployment will not need to consume too much computing powerThis means that the hardware market for artificial intelligence will be "reshuffled", and the 98% share of Nvidia GPUs may not be guaranteed at that time
Gupta said:
"Once the initial training is complete, the chip demand for AI will eventually normalize. The inference phase of AI requires less computing power than the training phase; High-performance PCs and phones are enough to run inference locally, reducing the need for GPU computing centers. ”The report also mentions that Nvidia's main revenue currently comes from tech giants, but after the release of the latest earnings report, the revenue growth of tech giants is expected to slow, and Meta and Amazon are also starting to develop their own AI chips, which may pose a potential threat to Nvidia.We believe that the cost of building large language models (LLMs) and limited monetization opportunities may eventually force NVIDIA's smaller (but still meaningful) customers out of the AI market to alleviate GPU** limitations. ”
The report data shows thatLast quarter, 46% of Nvidia's revenue came from five of the "Seven Sisters" of technology stocks, Microsoft and Meta alone account for 28%.
Gupta thinks:
"Given Nvidia's sales concentration, Nvidia is very sensitive to fluctuations in revenue growth [for big tech companies] and purchasing decisions from top customers. ”There is also a potential risk that,The model of using NVIDIA chips as collateral for financing is becoming popular among smaller customersFor example, Nvidia-backed cloud computing startup CoreWe**E used Nvidia chips while also receiving $2.3 billion in financing secured by H100, which it used to buy more advanced chips, which are likely to come from Nvidia as well.This is especially important given the previously mentioned competition in the chip market, and the possibility that Nvidia could lose revenue share as its customers begin to develop the ability to self-sufficiency chips. ”
The question is, how long can this "Ponzi game", which is entirely based on the dominance of H100 chips, last? What is now known is that Nvidia's growing share of revenue over the past two quarters appears to have come from startups in which it invests.
However, before accepting this argument, it should be noted that the Sandeep Gupta team has been committed to the fixed income field for many years, rather than equity assets such as **, and the reference value of the above views needs to be evaluated; And the team is still bullish on Nvidia for now, keeping the price target at $650 in the report.