Why Is This Wall Street Analyst So Bearish on Nvidia? Here Are 3 Key Reasons.

Key Points

• Shares of the chip giant have climbed 12-fold since the beginning of 2023.

• Not everyone is bullish on the stock though, which trades near $180 per share.

• Jay Goldberg at Seaport Research has a $100 price target for Nvidia, the lowest of any analyst.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) is one of the most beloved stocks on the market today. The company has a dominant lead in creating the GPUs designed specifically for artificial intelligence use cases.

Most analysts are big fans of Nvidia as both a business and as an investment. But one analyst, Jay Goldberg, has a $100 price target for Nvidia stock, the lowest on Wall Street. Whether or not you agree with him, every investor should understand why he expects the stock to fall over 40%.

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3 reasons Goldberg is bearish on Nvidia stock

Nvidia is growing by leaps and bounds. Sales are up by more than 1,000% over the past five years. And given that the AI market is expected to grow by more than 30% annually for years to come, Nvidia's double-digit growth rates should be here to stay. But shares trade at a lofty 27 times sales, and Goldberg thinks there are cracks beginning to show in Nvidia's growth story.

His first issue is with Nvidia's exposure to China. The ongoing trade war has disrupted the company's ability to sell its marquee chips to the country, a country that has an AI industry growing by 50% or more per year. Nvidia reportedly struck a deal with the U.S. to resume exports, but ongoing issues with the Chinese government may allow Chinese chipmakers to catch up and secure domestic market share.

Image source: Getty Images

Goldberg is also concerned with Nvidia's bullishness surrounding agentic technologies. While agentic services do pose a long-term growth story, Goldberg thinks that the world is still many years away from any meaningful real-world adoption of this technology.

Finally, Goldberg cautions investors that there may be a short-term limit to the skilled labor pool that can scale for AI demand as much as forecasts predict. Even Nvidia has admitted that a huge workforce retraining will be required in an AI-enabled world.

While you may not agree with Goldberg's contrarian outlook, even Nvidia's most bullish investors can benefit from understanding the challenges the company faces.

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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.