Nvidia (NASDAQ: NVDA) is at the epicenter of the AI revolution, with stock prices rising in the future vision, dominated by its graphics processing unit (GPU). Analysts like Tigress Financial's Ivan Feinseth are forecasting a $220 price target, implying a $5 trillion valuation. But the history of the high-tech recruiting cycle (think the dot-com bubble or cryptocurrency trend) suggests it exaggerates the timeline of innovation. Today, Nvidia's ratings rest on assumptions about AI growth that may outweigh reality.
High-tech hype and bust cycle
All transformational techniques followed a similar trajectory, including euphoric adoption, inflated assessments, and final calculations. Dot com bubble In the late 1990s, companies like Pets.com and Webvan traded at absurd multiples before the crash in 2000. Similarly, Blockchain boom Of 2017-2018, before the 70% collapse in 2018, cryptocurrencies such as Bitcoin were sent to $20,000. In both cases, investors mistaken the hype for a sustainable profit model.
Today's AI boom shares eerie similarities. Nvidia's GPU is undoubtedly important for training AI models, Return on Investment (ROI) Most companies remain early. The 2025 McKinsey Report found that only 12% of companies using AI “expanded their commercial success.” The rest are either trapped in pilot projects or suffering from expensive infrastructure upgrades.
$220 target: A leap in faith?
Analysts like Feinseth argue that Nvidia's dominance in AI data centres will sustain its growth. They cite 18,000 Blackwell Chips and a Saudi Arabian contract of $37.6 billion, projected to be $170 billion in revenue for fiscal year 2026. However, this rosy scenario assumes:
1. There is no meaningful competition: AMD's MI300X chip and Broadcom's custom AI hardware have already lowered Nvidia's pricing.
2. Unlimited Enterprise Expenses: When cost reductions sweep Corporate America, companies like Meta and Google are prioritizing in-house chip development over costly GPU purchases.
3. No damage to regulatorsUS-China trade tensions have already cost Nvidia $5.5 billion writes due to restricted H20 chip exports.
The $220 target, currently 55% above the $142 price in June 2025, requires Nvidia to resist these headwinds. Even bullish peers like Bank of America and TD Cowen have eased expectations and set goals of $180 and $175. The median analyst target of $173.92 reflects a market that is becoming more skeptical.
Why AI bubbles burst
The AI ”revolution” is still in its early stages. Unlike the Internet, which fundamentally restructured communication and commerce within a decade, the value of AI is tied to unproven use cases. Nvidia's GPU is essential today, but history shows it Rely on a single technology It causes confusion:
– The Threat of AMD: The MI300X combines AI acceleration and CPU cores to provide a cheaper and flexible alternative.
– Enterprise self-sufficiency: Meta's “Project Leonardo” and Google's “Gemini” chips aim to reduce Nvidia's hardware reliance.
– Market saturation: As AI adoption matures, the premium paid for Nvidia's GPUs is similar to how smartphone margins fell as the market matures.
Nvidia's 46.9x P/E ratio and 2.12 beta – Volatility Scale – Signal Overestimation and Risk. The 10% revision eliminates $350 billion from market capitalization, while the 30% decline (Jay Goldberg's $100 target) reflects the impact of Dot-Com Crash on Cisco or Dell.
Investment advice: Notes on FOMO
Investors need to resist the impulse to pursue AI potential and chase Nvidia stocks. The company's leadership in AI infrastructure cannot be denied, but its assessment assumes perfect execution in an already hostile environment. Consider:
– Sizing the position: Limit NVIDIA exposure to less than 5% of the portfolio.
– I'll buy a dip: Don't chase highs. Wait for corrections related to revenue errors or regulatory setbacks.
– Diversify into threats: Exposure to cloud providers like AMD or Amazon (AWS) provides hedge against Nvidia's risk.
The AI revolution can withstand, but its assessment is not affected by the cycle of history. As Warren Buffett once said, “When others are greedy, fear.” Today, Nvidia's stocks represent greed.
Ultimately, Nvidia's $220 target may be achieved, but only if the company can reject competition, cost savings and the inevitable correction gravity following the all-tech boom. For now, investors are wise to remember. The road to $220 is paved with risk, not just innovation.
