"The great Nvidia ( NASDAQ:NVDA) has had a rather lukewarm year, rising just north of 31% while comfortably topping the Nasdaq 100, which is up close to 20%. I'm sure NVDA shareholders aren't complaining about the market-beating gains on a year-to-date basis. Still, the big question is whether a new wave of AI demand could help propel next-generation GPU sales through the roof again."
"And while there is also no shortage of bulls that believe AI can continue unlocking next-level productivity (and perhaps soon profitability) gains, investors may wish to stick with AI stocks, but be a tad more picky about the price they pay and the downside risks they entail should a fantastic quarter no longer be able to cut it against what now feels like some very lofty analyst expectations."
"Either way, the AI race is just that: a race. AI is powering big gainers beyond just Nvidia With AI researchers going full speed ahead with the fear that rivals could catch up and America's lead withers away, there's little reason to believe that the AI trade will end in some sort of bubble-bursting scenario. Indeed, it feels like an AI bubble, and its imminent burst is now the consensus view on Wall Street."
Nvidia's shares rose about 31% year-to-date, outperforming the Nasdaq 100 near 20%. Hyperscalers are likely to continue heavy GPU purchases, supporting demand for next‑generation accelerators. Rising adoption of custom silicon and signs of AI spending moderation introduce risks to GPU revenue growth. Meta cut 600 AI jobs, illustrating potential pockets of reduced AI investment. Those risks could weigh more heavily on Nvidia than other large tech firms with larger earnings cushions. Market sentiment treats AI as a possible bubble, increasing the chance of volatile reactions to earnings. Investors should be selective on valuation and mindful of downside risk.
Read at 24/7 Wall St.
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