Nvidia (NASDAQ: NVDA ) has been the poster child of the recent AI hype rally, with its stock price soaring to stratospheric levels. The company’s chips have become synonymous with the AI boom, powering everything from chatbots to autonomous vehicles. However, after becoming the world’s most valuable company at one point, Nvidia’s stock has started to come back down to earth.
I’m still bullish on Nvidia’s future prospects, but I have serious concerns about its near-term outlook and frothy valuation. Here’s why you should, too: Nvidia’s Growth Expectations May Be Too Optimistic Nvidia’s recent financial results have been nothing short of spectacular, with revenue surging 262% year-over-year to $26 billion in Q1 2025. Analysts are projecting continued hypergrowth, with consensus estimates calling for revenue to reach a staggering $164 billion by fiscal 2026.
However, when you really scrutinize these projections, they start to look quite speculative and risky. Not only are analysts assuming the overall AI industry will be massive and highly profitable, enabling a flood of well-funded AI startups, but they are also counting on Nvidia to maintain its near-monopoly on AI chips and sustain its sky-high margins. Color me skeptical.
I believe it’s unrealistic to expect Nvidia to be able to charge such premium prices for its AI chips indefinitely. Many tech giants like Google (NASDAQ: GOOG , NASDAQ: GOOGL ), Amazon (NASDAQ: AMZN ), and Microsoft (NASDAQ: MSFT ) are alr.