Entering text into the input field will update the search result below

Nvidia Stock: Over-Pumped - The Selloff May Be Painful

Juxtaposed Ideas profile picture
Juxtaposed Ideas


  • Nvidia Corporation has ripped and charted new heights way above the previous November 2021 top, thanks to the Q1 FY2024 double beats and management's stellar forward guidance.
  • The demand for AI chips appears to be at a fever pitch, boosting Nvidia Corporation's projected Q2 FY2024 top line by +54% QoQ/ +64% YoY, returning to its previous high-growth cadence.
  • However, with the massive optimism baked into its valuations and stock prices, Mr. Market may have temporarily forgotten how painfully the tech bubble popped in 2022.
  • For now, it seems that peak irrationality, recessionary fears, and generative AI hype may have unnaturally boosted Nvidia Corporation's prospects in the intermediate term.

Rollercoaster Train

DNY59/E+ via Getty Images

The AI Investment Thesis Is Too Volatile At These Heights

NVDA 2Y Stock Price

It appears that the market and investors alike have chosen to be somewhat irrational again, pushing NVIDIA Corporation (NASDAQ:

This article was written by

Juxtaposed Ideas profile picture
I am a full-time analyst interested in a wide range of stocks. With my unique insights and knowledge, I hope to provide other investors with a contrasting view of my portfolio, given my particular background.Prior to Seeking Alpha, I worked as a professionally trained architect in a private architecture practice, with a focus on public and healthcare projects. My qualifications include:- Qualified Person with the Board of Architects, Singapore.- Master's in Architecture from the National University of Singapore.- Bachelor in Arts from the National University of Singapore.If you have any questions, feel free to reach out to me via a direct message on Seeking Alpha or leave a comment on one of my articles.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of NVDA, AMD, GOOG, AMZN, MSFT, INTC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (154)

I will continue to pound the table that: NVDA is trading at a bargain under $400 level, and that this current: “gift horse buying opportunity trading range won’t last for long”.
— I just hope that it holds at its current trading range through next Wednesday, when my 401K DCA uploads.
*** Go long NVDA, and; you’ll prosper in future abundance with one of the great growth businesses of our time!!!
mschratter profile picture

Just to be clear, I am in complete agreement that Nvidia is a great company selling a product that is in high demand. That said, fundamentals matter and herd emotionality often takes a stock price far ahead of itself.

All stocks fall back to rational prices. As in 100% of the time. There is literally no example otherwise in all of history. And this is why there is a flood of insiders selling the stock at these prices.
@mschratter Amazon has not come down to earth. It is still selling at crazy prices and I still here that profits are coming down the road. But, overall I agree with you. We don't know how explosive and large the market for AI chips and SaaS related technology is. Most likely in the trillions. I think it is the last frontier. What comes after full automation? The end?
NVDA insiders are selling stock options that are generated because the stock went up.
They normally take the cash and then distribute it over other stocks.
Not fear based at all just good investment management.
NVDA bottom of page
Check the buy price attached to the sale and number awarded to number sold some are small
TENCH 100K shares $38 million but with 3.3 million still owned.
mschratter profile picture

99.99% of new bubbles and technologies do not become Amazon.
A near $1T company on just $40B in sales is definitely "baked in". This is why we have business schools to teach ppl how to invest.
Sell off no, trimming yes. Foolish people sell thinking they can time the market
Yolo 2
05 Jun. 2023
When NVDA was a small company it was reasonable to purchase it with the hope that it would grow its numbers to justify high PE. It doesnt seem mathematically possible for the stock to grow enough to justify even half of its value now. Its what I leared in my Econ class in college, that large companies can not grow much or at all when they get really big, they just pay dividends. NVDA is priced way past that point now in my opinion, and when analysts stop hyping the stock and the AI hype in general fades, the stock will likely drop considerably, or more like a rock.
Hudson Investments profile picture
@Yolo 2 Like a rock, pretty soon.
@Yolo 2 I heard that argument for over 10 years or so with Apple when it was ~$500B or less. Breaking $1T was like breaking the sound barrier for the first time. The internet has changed everything. Now we have plenty of companies that can scale to over $1T.
@Yolo 2 dream on! All you can say is NVDA is out of your reach and you would sit on sideline until you can buy it at a lower price after splits.
NVDA will be able to raise the price of its chip/software combo's and business will pay it.
They can only raise it to a certain extent. After which, the likes of Apple will build their own. The moat is a technological one which is not as strong as a network moat. It’s got an advantage like Tesla but over time, that gap becomes smaller. At one trillion, growth is much less than when it was 100 billion, law of gigantic numbers.
Apple and others will have to decide if they pay more to Nvidia or if they invest lots of money into researching a field new to them. Data center acceleration and interfacing is a completely different field from creating a chip for mobile devices or ASICs for specific tasks.
AnimeSnoopy profile picture
Ahh young love...

This whole thing kinds reminds me of my first girlfriend, in high school.
High-school me would have figured we'd be married with 3 kids by now.
Thank god that didn't happen lol.

Kids wanna wife up $NVDA on forward valuations 3-4 years from now (under ideal conditions).
Well, don't say I didn't warn you...
The AI industry is young...

You might find yourself eye-ing up some pretty attractive opportunities in the space between now and 2026...
My advice: don't tie yourself down...

Personally, I'm been short young love... Maybe that makes me heartless or a pessimist or something...
But when I see kids in high school "in love"... Well if you offered me a wager on whether it'll last, easy I'd go short on that every day.

So, I'm short $NVIDA at $408
Juxtaposed Ideas profile picture
@AnimeSnoopy Interesting points!
Hudson Investments profile picture
@AnimeSnoopy The big NVDa PLUNGE so oh what an opportunity to buy the dip today, Monday when Nvda retreats off its highs. They’re talking head and shoulders pattern bullish to bearish plunge.
Married and first kid at 19, 48 years now.
Beat the odds.
Well written article but unfortunately I disagree with the fact that this stock cannot go higher. Sure it is already rocketed up but it is just the beginning. All the other companies still have to catch up to generative AI and many will be trying to do so but not fast enough giving NVDA even more space in my view.
Juxtaposed Ideas profile picture
@Up and Away Agree that it may go even higher for the long-term, but we may realistically see $350 in between, or maybe even lower at $320. We'll add again at those levels. Either way, thank you for the kind words.
Hudson Investments profile picture
@Up and Away You must be dreaming NVDA but thinking INTC.
My list of best AI stocks to grab on the coming "hype" sell off. Wait for Chanos to short em then buy em on the the big dip.
- Hardware: Nvidia, Qualcomm, Micron, Seagate, Applied Materials, AMD, Intel, Dell.
- Software: Palantir, Splunk, Alphabet, Meta, IBM, Amazon, Microsoft, Tesla.
mschratter profile picture
@pmapires just buy the sector in an ETF.
04 Jun. 2023
A rational take from another guy that missed it. Doh!

We're in the first inning of AI. This could be more like 1994 than 1999 if you want to compare it to the dot com era.

Own Nvidia. Do not trade it. They OWN the space like no other. Possibly more dominant than Intel during the 80s PC wars. They sell to everyone. Do not ever expect this stock to get cheap, or even reasonable.
Cisco became a 50 bagger von 1994 to 1999. Despite the collaps it remained a 10 bagger afterwards.

So we might see Nvidia at 50T???

I think I would sell then as my position would become a high 8 digit figure lol.
AjitMD profile picture
@DMS348 Hard to estimate the profits that AI will make for comoanies like Msft, Google and others. However, these companies just started the surge in spending on AI. Plus new semis. Wait times are 12+ months. Nvda will correct but not collapse. Too many investors want to buy the stock.

Needs to walk sideways for a time to build a new base.
3 months to see if Earnings are really there, it would lift off if they are or are beat. Hitting 40% and missing 50 will drop it like a rock.
Risk/Reward the same old game.

NVDA needs time for support lines to catch up.
Seriously, for the past two decades, NVDA was considered overvalued fundamentally at any given price or time. And yet, NVDA had appreciated 100x+ since 2014. Why?Why were people keep using the same and wrong fundamental analysis on NVDA over and over again? Why are generation and generation of professionals not learning the mistakes? I just don't understand. I don't. This article will not age well just like these countless articles before it. I don't have the crystal ball to know what the price will be, but I know NVDA will continue to be volatile but do well in the future, so buy and hold. -- from a looong term decades long NVDA stockholder.
@easyxpress because they've been incredibly lucky and that's hard to see coming! They had their nice little graphics and gaming niche but then ... crypto! And just about when crypto started getting off GPUs ... AI! And just when the AI / data mining thing died out - autonomous cars! And just when everyone was giving up on those ... GPT! Doh!

To be fair Intel has also been very lucky but just once, the cloud came along circa 2017 and saved their bacon or they'd be in even worse shape than they are today.
Bob Kleinberg profile picture
Luck has little to do with Nvidia's success.
AI is bulletproof technology against a bear market correction….$$$$$$

No Bubble won’t go unpunished to investors, as the AI hype is just getting started….$5T on a he sideline can keep fueling the mania for months or years……$$$$

Wall Street smells the money, as PE multiplies have been stretched and the rally continued beyond reasonable…..$$$$$ imho ???

More gains ahead, AI rally potential is unlimited……00
@Maverick 2021
$5T on the sidelines? What do you do, pull numbers out of the air? Even if that was accurate, they're smart enough to know stocks don't go parabolic for long, and at least half of the gap up will be filled. The smart money knows there's a much better entry into NVDA in the $340 range.
Hudson Investments profile picture
@Maverick 2021 Funny, I see AI much differently than you believe. I believe is simple the next bubble that investors are convincing themselves is the second coming. It will have legs only if it puts money into the coffers of the hardware and software companies like NVDA, MSFT, AAPL within a year from today.
NVDA is subject to all the macro economic issues that every equity is effected by.
I especially believe that the raising of the debt ceiling was only step one. The USA was not expected to default. Step two is the liquidity problem that banks and equity stocks have. The Fed will attempt to issue new treasury notes and bonds next week and it will be interesting how successful these new issues will be.
Step 3 is the measure of inflation and the interest decision by the Fed at their next meeting in July.
I watched Jensen huang’s new presentation. It’s mind blowing. I cannot bet against him and nvidia. As a matter of fact, I think nvidia is changing the world in the revolutionary way…I’ll hold my position on nvda for the next 5 years and buy every pull backs along the way.
Juxtaposed Ideas profile picture
@Cdoctator Agree on the pullback.
The investment 'professionals' (of which, 90% can't even beat the S&P) who pumped up NVDA this past month , are the same people who were selling META in the $100's, and got it down to $81, along with GOOG. It's the sell low, buy high crowd. CNBC's flavor of the month is 'Ai, it's the future, bro!' But 3 months ago it was 'Tech stocks are a sell, because 'muh interest rates' . Two years ago, it was the 'reopening plays'. I remember watching CNBC and they were saying buy DIS at $160 because 'reopening plays, are the future bro!' Great two year return on that one.
@daz15 dis was, in fact, a great reopening play. But like any latest flavor of the month, it wasn't a very good investment ... after that.
Juxtaposed Ideas profile picture
@daz15 You may want to refer to my historical buy rating for META & NVDA for reference.
productivityLeaps profile picture
I wonder, don't you, what the current growth rate is for the not-so-little, let's call it an intermediate sized green shoot of the $200mm in SaaS sales NVDA posted? I mean, we can be confident it grew at ~100% in ~8 months given what Colette told us two earnings calls ago then at a recent investor conference. At the earnings call I'm referencing, I'm pretty sure it was an earnings call although it could have been an investor conference shortly after that earnings call, she told us $100mm had been the TTM for SaaS sales. Then, we learned it 2x that maybe six months later. Regardless those specifics, suffice to say it 2x in well under one year.

So, maybe the @juxtaposed ideas will get out his/her virtual calculator and spitball that for his/her readers. I'd say it has been clear for some time that these architectures, Ampere, Hopper, will provide a longer GPGPU transition cycle because there's so much software digestion required and NVDA planned for years now to transform itself this way. Don't ya think? And wouldn't that be pottant to anticipate towards valuation?
Juxtaposed Ideas profile picture
@productivityLeaps Agreed, though these are mostly baked in already, in my view. We may differ in opinions and that is the beauty of it, isn't it?
Murad Shawar profile picture
@Juxtaposed Ideas NVDA overvalued by half just my opinion .
productivityLeaps profile picture
@Juxtaposed Ideas Well, I'll suggest here it is very difficult to know whether the SaaS which Colette indicated grew at least 100% in ~8 months, are "baked in". That's because no one, not even those leading NVDA, know just how significant those sales will be. Seems likely to me they cannot be fully baked in for that reason. After all, very likely many of the SaaS sales are recurring in perpetuity given the iterative nature of LLMs, SaaS, and the rate of change in technology today. I

t's the subscription model which Gillette made famous some years ago and which works well in SaaS. It is probably the smartest business model I've seen depending on the product, of course.
Technology ETFs :

ticker - week of 6/2/23 - YTD returns

XLK - 4.16% - 34.12% (overall tech)

IGV - 4.49% - 29.05% (software)
SMH - 4.04% - 44.02% (semis)
FDN - 6.61% - 29.61% (e-comm)
IPAY - 2.99% - 6.21% (fintech)
WCLD - 7.66% - 22.69% (cloud)
@Sleepless@FED XLK almost 50% with only AAPL, MSFT. NVDA a distant 3rd at about 4.5. XLK has just about doubled in the last year, which is very hard for any ETF to pull off.
indeed and XLK has quietly outperformed QQQ - it returned 30% more over the last 5 yrs
There are a powerful lot of NVDA put options out there!!!
longnose profile picture
This is patterns match talk. The interest rate cycle, inflation picture and of course AI use case is very different than year ago. Facts changed thus price changed. No one else offers chips like nvda for consumption. Goog for internal use. I think nvda may have far entrenched advantage now than just year ago. Even Mlnx switches will be very important
Clauser1960 profile picture
When you are up 300 % or 400%, you just don t care
mschratter profile picture
@Clauser1960 What? haha
Clauser1960 profile picture
@mschratter I am up 600% , let's see who LOLs more
mschratter profile picture
@Clauser1960 haha

Stop being so childish.
Shorting this stock could be extremely costly especially when everyone is betting against it.
This is where shorts loose their shirts.
mschratter profile picture
@notre Or that's where the real money is made.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.