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According to insights shared by Ali Mogharabi, Senior Equity Analyst at WestEnd Capital Management, the recent shift from training artificial intelligence systems to utilizing them for inference may lead companies, especially major cloud infrastructure providers, to reduce their expenditures on Nvidia’s robust chips. Mogharabi discussed this perspective during a segment on Schwab Network, suggesting that this trend could affect the demand for Nvidia’s latest and most advanced technologies.
Market Dynamics for Nvidia’s Stock
In light of these developments, WestEnd has entirely liquidated its holdings in Nvidia (NVDA) stock. Mogharabi pointed out several adverse factors influencing Nvidia’s market position, including the rise of in-house chip production by large cloud companies and ongoing geopolitical tensions. These challenges may exert downward pressure on Nvidia’s stock valuation. The analyst raised concerns that the combination of these factors and broader macroeconomic uncertainties could lead to a rapid deceleration in Nvidia’s growth trajectory.
Potential Re-Entry Point for Investors
Mogharabi mentioned that he might consider re-investing in Nvidia if its stock price falls below $100, a threshold he believes would better reflect the increased pressure on valuation multiples. He noted that such a price point could potentially accommodate the reduced demand from cloud service providers for Nvidia’s newest offerings.
Evaluating Alternative Investments
While Nvidia remains a significant player in the AI sector, Mogharabi expressed that other AI stocks could offer greater potential for returns within a shorter period. Investors searching for promising alternatives that trade at less than five times their earnings are encouraged to explore a report discussing the cheapest AI stock.
Further Reading
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Disclosure: None. This content was initially published on Insider Monkey.
Source
finance.yahoo.com