META - Price Outperforming Fundamentals: Why I Am Downgrading Nvidia

2024-06-17 09:45:39 ET

Summary

• Nvidia Corporation is a prime beneficiary of the AI frenzy, supported by booming AI spending.
• Data Centers now represent 87% of the company's revenue, transforming the business with aggressive product-cycle releases, crushing competition.
• In the last 12 months, fundamentals have improved greatly, yet the stock price has gotten ahead of itself.
• The stretched forward valuation may anchor any forward returns and present a downside risk to investors buying shares at today's price.
• I have no other choice other than to downgrade Nvidia to "Hold" based on the forward outlook.

That's right, you read that correctly. Today, I am downgrading the hyped Nvidia Corporation ( NVDA ) to a "Hold" rating.

I am sure this move will not be popular among many fellow investors, as it's easier to follow the herd and be wrong rather than go against the stream and "perhaps" be right....

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