10 Buzzing AI Stocks on Wall Street

3. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 234

NVIDIA Corporation (NASDAQ:NVDA) is one of the 10 Buzzing AI Stocks on Wall Street. On December 1, Seaport Global Securities analyst Jay Goldberg reiterated a “Sell” rating on the stock with a $140 price target.

The firm has flagged competitive risks such as from Google’s TPUs as well as financial pressure rising from heavy customer investment commitments and working-capital spikes. It believes that Nvidia is facing growing competitive pressure and relying on financial arrangements that are not fully reflected in its results but are already becoming “material.”

Nvidia’s $26 billion of cloud compute service agreements, which it says will support research and its DGX platform, function like rebates that could significantly reduce gross margins (“400bps off gross margins next year, or at least $0.30”)

Moreover, Google’s growing ability to promote third party use of its TPUs, as well as Nvidia’s growing commitments and investments to customers are also adding to the pressure.

“Google has surprised with its ability to promote third party use of its internally designed TPUs. TPUs are not for everyone, but can outperform Nvidia systems on many metrics. ● Growing commitments and investments to customers. The company spent $6 billion this year in private companies. It has commitments for another $17 billion (including $5 billion to Intel). The OpenAI agreement is not signed but could add another $100 billion to the list.”

Seaport Securities also discussed how working capital is significantly up this quarter. While this may be a sign of strong demand, the firm also sees it as a function of the company “smoothing out working capital needs among its ODM customers.”

NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.