Nvidia’s 2025 Won’t Be So Easy (Downgrade)

Summary:

• Nvidia’s 2024 financial performance was stellar, with revenues nearly doubling to $113 billion and gross profit soaring to $86 billion.
• Intensifying competition from Broadcom, Marvell Technology, and AMD could challenge Nvidia’s dominance in the AI hardware market in 2025.
• Market saturation and cyclical demand fluctuations may slow Nvidia’s growth, with revenue projections indicating a 40-50% increase next year.
• Supply chain constraints and production challenges, including delays in Blackwell architecture GPUs, could impact Nvidia’s profitability and market position.
• At 50x TTM EV/EBIT, Nvidia stock is trading expensive, and reducing exposure may be wise.

In August 2024, I argued that investors should watch out for signs of slowing momentum and I assigned a “Hold” recommendation:

On a long-term perspective, however, the first cracks may be appearing in the Nvidia equity story. Competition is intensifying

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Not financial advice

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