Why NVIDIA Corporation (NVDA) Stock Won’t Stay Above $100 A Share

Advanced Micro Devices, Inc. (NASDAQ:AMD) & Intel Corporation (NASDAQ:INTC) Will Come Roaring Back In The Data Center Chip Market In 2017

In this industry, it is rare to gain market share across multiple markets. In 2016 we definitely saw Nvidia gaining meaningful share in the gaming market which it predominantly took from AMD. However, Advanced Micro Devices, Inc. (NASDAQ:AMD) recently announced a new line of computer graphic cards which on the surface look very impressive and will look to regain lost market share from Nvidia in the data center machine learning segment.

Although Data Center technology (2) will continue to grow at breathtaking speeds going forward, I just don’t see any strong competitive advantage for NVIDIA in this space which would keep competitors at bay. In fact, Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices, Inc. (NASDAQ:AMD) are also coming out with their own high-end performance chips. This market is going to get extremely overcrowded in the near-term which won’t do any favors for Nvidia’s margins and revenue growth.

Investors Should Base An Investment Decision On Activity In The Self-Driving Space

With US stocks at all-time highs and with NVIDIA Corporation (NASDAQ:NVDA) trading with an earnings multiple of 52.9, I just think that the risk here on the downside is significant. Furthermore, although Nvidia has partnered with many car manufacturers, there is no guarantee that the company’s technology will be used en masse in this area in the future. In fact, I don’t see revenue coming from the self-driving division for at least two to three years. So, investors should in no way be basing an investment decision just on Nvidia’s current partnerships. Again, I fail to see the long-term sustained competitive advantages in the automotive space, especially with so many tech companies (with far bigger research divisions) investing in this space at present.

Also Read: Citron Says Nvidia (NVDA) Stock Belongs At $90, Does It Really?

Summary

NVIDIA Corporation (NASDAQ:NVDA) stock had a fantastic 2016, but I just feel that there is too much growth priced into the stock to warrant meaningful future gains. The company, in my opinion, will just have too much strong competition in areas such as data centers and automotive, for its margins and earnings growth to continue. With stocks at all-time highs, caution is warranted at present.

Looking for great tech stocks? Check out Amigobulls’ top stock picks (3), which have beaten the NASDAQ by over 111%.

The article Why Nvidia Corporation (NVDA) Stock Won’t Stay Above $100 A Share originally appeared on amigobulls.com. Watch our analysis video on NVDA.

Amigobulls.com – Watch, Analyze, Invest. Why spend hours putting together numbers you can get in minutes, in one simple video? Our ‘Robo Advisor’ videos give you every number that matters, in 1 minute. Find insightful articles with ideas on investing, top stock picks that outperform the markets, personalized portfolio analysis videos and a whole lot more. Amigobulls.com – Your Friend On Wall Street.

Additional Links:

(1) http://fortune.com/2017/01/05/nvidia-gamble-netflix-video-games/?ref=il

(2) http://fortune.com/2016/12/28/nvidia-booming-stock-fall-citron/?ref=il

(3) http://amigobulls.com/stocks-to-buy/top-tech-stocks/?ref=il&ref=im