Nvidia is currently riding the wave of generative AI to great heights, but some believe the GPU king's time for success is limited and expect the stock price to fall soon.
Stock market short interest in Nvidia is worth about $34.4 billion, nearly double the amount hedged against Apple, Reuters reported, citing a report from financial analytics firm S3 Partners. The report said at least some investors are betting that Nvidia's soaring stock price will soon fall.
The California-based semiconductor company's market capitalization peaked at about $3.12 trillion this week, briefly overtaking Apple to become the world's most valuable company after Microsoft.
Nvidia's shares have since fallen about 2.6%, giving it a market cap of $2.93 trillion — still an impressive figure for a company whose shares have risen about 143% so far this year.
Some industry watchers expect Nvidia to continue to grow revenue steadily each quarter of fiscal 2025 as the supply of premium-priced accelerators increases, and some believe it could eventually overtake Microsoft as the world's most valuable company.
But according to MarketWatch, few companies can maintain above-average growth rates for more than a year or two, which means Nvidia may soon be on the decline.
this is, Registry Last month, NVIDIA reported a new record increase in first-quarter fiscal 2025 revenue, up 262% year-over-year.
These annual increases are compared to Nvidia's previous year, before the wave of generative AI began to take effect, and analysts expect future growth rates to be much lower.
A company's share price can take a hit if traders realize that expectations of continued strong growth are not met, as chip designer ARM Inc. recently discovered.
Additionally, some in the industry believe we're in an AI bubble that will burst sooner or later, with The Guardian recently arguing: “Nothing grows exponentially forever. So are we trapped in an AI bubble? Is the Pope Catholic?”
Economic research firm Capital Economics predicts that an AI-driven stock market bubble will push the S&P 500 to a high in 2025 before bursting in 2026, and has published an approximate date.
