Nvidia (NASDAQ: NVDA) closed 2024 with an impressive 171% surge in stock value, reaching a market cap of over $3 trillion.
The company’s growth has been fueled by the increasing demand for its AI chips, with Q3 fiscal 2025 revenue soaring 94% year-over-year to $35.08 billion. Operating margins of 62% have highlighted Nvidia’s ability to convert this demand into significant profits.
However, despite these stellar results, top investor Cavenagh Research has raised concerns about Nvidia’s future growth. The firm, ranked among the top 4% of stock analysts, believes that 2025 could present challenges for the company.
Cavenagh points to several factors that could hinder Nvidia’s growth, particularly increased competition from companies like Broadcom, Marvell Technology, and AMD, who are aiming to take a larger share of the AI data center market.
“Nvidia’s competitive moat is only sustainable if the company continues to innovate every 12-24 months,” says Cavenagh.
Furthermore, Nvidia’s impressive growth has relied heavily on massive capital expenditures by hyperscalers such as Meta and Microsoft.
Cavenagh is cautious about whether these companies will continue to ramp up spending, as doing so could limit their free cash flow, making it harder for Nvidia to maintain its rapid expansion.
Given these potential hurdles, Cavenagh advises investors to stay away from Nvidia stock for now, despite its recent success.
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