By any measure, 2024 was Nvidia’s (NVDA) year.
The AI-chip superpower was the top performer in the so-called Magnificent Seven — a group that include such righteous tech names as Amazon (AMZN) , Apple and Facebook parent Meta Platforms.
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The chip colossus even temporarily deposed tech giant Apple (AAPL) as the world’s most valuable company.
Nvidia was also the Big Kahuna on the Dow Jones Industrial Average this year, even though the Santa Clara, Calif., company joined the 30-company benchmark only in November.
Last month, Wedbush analysts described the artificial-intelligence revolution as “the biggest tech transformation in over 40 years.”
“The start of this $2 trillion of AI spending over the next few years all starts with the godfather of AI, [Chief Executive Jensen Huang,] and Nvidia, as they are the only game in town with their chips the new gold and oil,” the investment firm said.
The company beat Wall Street’s third-quarter earnings and revenue expectations last month, with Chief Financial Officer Colette Kress telling analysts that “we continue to deliver incredible growth.”
“All market platforms posted strong sequential and year-over-year growth, fueled by the adoption of Nvidia-accelerated computing and AI,” Kress said.
Jensen Huang, co-founder and CEO of Nvidia, speaks during the Nvidia GPU Technology Conference in San Jose, Calif., in 2024. Nvidia was the Dow 30’s top performer in 2024. (Photo: David Paul Morris/Bloomberg via Getty Images)
Concern about competition
Kress told analysts that demand for Blackwell, the company’s high-performance processor, is “staggering, and we are racing to scale supply to meet the incredible demand customers are placing on us.”
Nvidia has hit some rough spots lately. Earlier this month an extended slump pushed the world’s leading AI-chip maker into correction territory,
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Analysts have suggested that the decline was sparked by concern that AI spending was slowing down or that that business was spreading to the company’s competitors.
Some have pointed to the gains for rivals, such as Broadcom (AVGO) and Marvell Technology (MRVL) , as evidence of increasing competition for Nvidia in the broader AI space. Those two companies have taking an increasing share of the market for application-specific integrated circuits, which are custom-designed chips made to perform specific tasks.
ASIC chips help giant providers of cloud-networking infrastructure and services, like Alphabet (GOOGL) and Meta, (META) increase the speed and reliability with which they process information.
In addition, multiple key players in a fast-growing AI sector seem to be turning away from Nvidia as the company experienced delays in producing its AI chips.
Morgan Stanley analyst Joe Moore noted that the prior generation Hopper builds continue to slow, which he described as “a non-issue.” But he also said there would likely be noisy headlines in early 2025 that Nvidia builds are coming down.
In addition, the analyst, who has an overweight rating and a $166 price target on Nvidia shares, said not every version of new Blackwell products was ready to ship at the same time.
He pointed out that all the Blackwells should be sold, even if this drives allocation from one customer to another, and he says this persists all year. Moore said that this is not a concern that should linger.
Fund manager warns about Nvidia’s ‘day in the sun’
Doug Kass also has a few things to say about Nvidia’s prospects for the coming year.
Kass is a longtime hedge fund manager whose career stretches back to the 1970s at Putnam and includes a stint as research director at the billionaire Leon Cooperman’s Omega Advisors.
In a post on TheStreet Pro, Kass included his observations about the chipmaker in his list of 15 big surprises for 2025.
The annual list of predictions covers such diverse areas as economics, politics and sports.
For example, Kass says Berkshire Hathaway (BRK.A) will eliminate its entire stake in Apple, selling all those shares by midyear.
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And CEO Warren Buffett’s corporate curtain call will be the acquisition of Boeing (BA) in 2025 — the largest purchase in Berkshire’s (BRK.B) history, Kass predicted.
Kass says Nvidia’s “day in the sun” will come to an abrupt end, and the share price will slide to between $50-$75 in a matter of days, as it grows clear that double and triple ordering buoyed the company’s past reported profit and revenue lines.
Double ordering is a common practice in the semiconductor industry, especially during times of high demand, when customers order more chips than they need because they’re concerned about a supply shortage.
Nvidia shares were up nearly 2% to $139.70 at last check, so this would be a comedown of 62%.
Kass said that the view that other manufacturers “overearned” will produce contagion and a setting in where large-capitalization stocks like Microsoft (MSFT) and other hyperscalers’ shares suffer similarly. (The hyperscalers are the large providers of cloud infrastructure and services.)
Kass also estimated that the S&P 500 Index would fall about 15%, while the technology-laden Nasdaq will slide more than 20%.
He also said, however, that the equal-weighted S&P Index will decline only 5%.
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Kass added that under the weight of AI disappointment, higher interest rates, rising inflation and lower economic growth, financial and technology stocks will be among the largest losers.
And sports fans, please take note: Kass said the heavily favored Super Bowl contender, the Kansas City Chiefs, will get blown out in the first round of the NFL playoffs.
Shortly thereafter, similar to the famous 1973 wife swap of New York Yankees pitchers Fritz Peterson and Mike Kekich, the Kansas City Chiefs’ Patrick Mahomes and Travis Kelce will switch partners, Kass predicted. Mahomes would marry superstar singer Taylor Swift and Travis Kelce would get hitched to Brittany Mahomes, a founding co-owner of the Kansas City Current of the National Women’s Soccer League.
You heard it here first.
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