Gil Luria.Nvidia, analyst at Da Davidson Tech, has slowed growth, falling 6% as fourth quarter revenues fell 6% as it didn’t overwhelm investors, and Nvidia’s shares peaked after a 1,776% increase over five years.
After winning 1,776% over five years, one analyst says Nvidia appears to be at its peak.
According to Gil Luria, DA Davidson’s high-tech analyst. Luria wrote Thursday after Chip Titan reported growth was set to slow.
“This is as good as Nvidia,” he told CNBC Thursday. The stock fell 6% after the company’s fourth quarter earnings disappointed, bringing the tech-heavy NASDAQ down 3%.
For Luria, the concern is not whether Nvidia is implementing its strategy. This is because our 2025 revenues will more than double $130 billion year-on-year.
Instead, the concern is that Nvidia’s growth continues to slow.
Nvidia’s four-quarter revenue growth rate recorded at 78%, 78% over the previous year.
Luria told Business Insider about some of the obstacles seen before chip makers.
1. Peak demand for AI chips
First, Nvidia’s spending on GPU chips by its biggest customers, including Microsoft, the Meta platform and Amazon, is probably at a peak, even considering the significant increase in capital spending guidance last month.
“Their big customers have increased the amount of what they spend on Q4, perhaps the most so far as they have,” Luria said. “Two of the three biggest customers say CAPEX will be flat in the first half of the year.”
This is a big deal considering that more than a third of Nvidia’s revenue comes from just three customers. This concern comes from the idea that, in the end, excessive supply and calculation demand for Nvidia’s GPU chips will wander, especially as businesses begin to scrutinize their return on investment in AI.
“We believe that, despite the continued strong short-term demand, as customers begin to scrutinize ROIs with AI calculations, a decline in demand for NVIDIA calculations is inevitable,” Luria explained.
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2. Intensifying competition with China
China is another major concern, and Loria argues that Nvidia is facing increasing competition even without the Trump administration’s tariffs.
“There are even more restrictions on selling chips to China, so those sales will be under pressure,” Luria said.
In his revenue update note, Luria reportedly has shifted inference workloads to GPU chips created by Huawei, “emphasizing the increasing competitiveness of calculations in the region.”
3. Low profit margin
But perhaps the most important factor is Nvidia’s profit margin seaseasing, as the response to release new GPU chips every year has been accelerated.
“Every time they get to a 75% total margin, the new product is going to pull that back to the low of the ’70s,” Luria said.
Nvidia’s profit margin guidance is a weakness in its latest revenue report, and it expects a gross profit margin of around 71% in the first quarter as the company takes over the lamp in Blackwell GPU production.
Despite the slimy outlook, Luria is not bearish to Nvidia. Analysts rate nvidia “neutral” with a price target of $135.
Nvidia’s shares were initially sourced between profits and losses after releasing fourth-quarter earnings results, but in Thursday’s trading session it ended up falling about 4% to $126.49.
