Can Nvidia Repeat This Year’s Stellar Performance?

Shares of Nvidia (NVDA) have more than tripled this year due to the artificial intelligence (AI) frenzy. However, the extreme bullish expectations that have been priced into the stock also make it unlikely that the rally in Nvidia can continue at a torrid pace.  Shares of Nvidia barely budged and have been range-bound in the second half of this year even after the last two earnings reports showed profit and revenue exceeded sky-high expectations. 

Analysts remain overwhelmingly positive on Nvidia, with a 37% upside seen in the stock price over the next 12 months.  However, that is significantly below this year’s gains.  Some analysts are concerned that Nvidia’s current growth trajectory isn’t sustainable over the long term.  Edward Jones last week downgraded Nvidia to the equivalent of neutral and said, “With exceptionally strong demand and no real alternatives for its products, we believe Nvidia is experiencing peak demand, and this will make it more challenging for the company to continually outpace expectations and drive the stock meaningfully higher.”