Wall Street Says Nvidia Has Nearly Peaked? Time to Sell?

Nvidia’s (NVDA) run higher over the past two years has been nothing short of amazing. Shares soared 950% higher during that period and it added $3.1 trillion to its market capitalization to become the world’s most valuable company.

Massive artificial intelligence spending supercharged its growth, but with Nvidia due to report earnings on Feb. 26, Wall Street suggests the semiconductor stock may soon hit a ceiling. Analysts have assigned a consensus one-year price target on NVDA stock of $164 per share. That implies only a 15% gain over the next 12 months.

The chipmaker gained 239% in 2023 and 171% last year. While no stock can grow forever, Wall Street is saying the big runup is almost over. Investors should ask whether analysts have it right about Nvidia and there are better stocks to bet on, or are they missing the bigger picture.

AI isn’t over yet

AI is still in its infancy. Spending on generative AI rose from $2.3 billion two years ago to $13.8 billion in 2024, a sixfold increase or a compounded annual growth rate of 145%, according to Menlo Ventures. Yet this is just the foundational level of AI: chatbots, copilots, and enterprise-level search and retrieval.

Nvidia says the next phase of opportunity is “agentic AI,” or AI that can act, reason, and interact with the physical world like humans do. CEO Jensen Huang foresees a multi-trillion-dollar opportunity. 

Building AI’s future foundation

Nvidia, of course, is already preparing to seize this opportunity with its next-generation AI accelerator Blackwell and the version to come, code-named Rubin. Yet the chipmaker is running into some growing pains. An overheating issue with Blackwell that was supposedly resolved last year has reportedly resurfaced. Some big customers are cutting back their orders or are opting for last generation Hopper chips. It’s a rare misstep by the AI chip king.

It comes at an inopportune moment, too. The Stargate joint venture between Oracle (ORCL), OpenAI, and SoftBank identified Nvidia as one of a handful of initial key technology partners. It will likely heavily upon Nvidia’s Blackwell chips and server stacks to build out this massive AI data center.

The overheating issue could give rivals like Advanced Micro Devices (AMD) a nose under the tent to steal away customers with its powerful, but cheaper Instinct MI300X and MI325X chips. It puts Nvidia in a tight place.

Is NVDA Overvalued in 2025?

With Q4 earnings approaching, NVDA stock is priced for perfection. Underpinning analyst buy recommendations are forecasts for revenue of $38.11 billion generating $0.85 per share in profits. That’s year-over-year growth of 63% and 72%, respectively. It means Nvidia needs to post stellar results to maintain its upward momentum.

Growth rates are already slowing, which isn’t especially alarming, but NVDA stock could be heading for the ceiling Wall Street’s price target implies. 

Make no mistake, that’s still a $4 trillion market valuation and a long runway ahead for AI remains. For the immediate future, though, there just might be better investments than NVDA’s premium-priced stock.

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