Nvidia’s (NVDA) growth numbers aren’t impressing Wall Street as much as they used to.
Nvidia reported earnings on Wednesday that showed the company’s profit and revenue rose more than 100% year-over-year. But it also marked the company’s slowest year-over-year revenue growth in a year, 122%, and the year-over-year growth rate was less than half of what Nvidia reported in the first two calendar quarters of 2024.
Shares fell nearly 4% on Thursday afternoon.
This growth slowdown is the biggest concern for the stock right now, according to Gil Luria, CEO of DA Davidson, which is why he maintains a neutral rating on the AI giant.
“Next year we will at least see slower growth and possibly even a drop in turnover,” said Luria.
“If you look at the consensus estimates and the sell-side estimates, it’s going to continue to grow at a very, very high level. That’s very hard to justify, given that Nvidia’s revenues are these other companies’ margins.”
At some point, Luria argued, the big tech hyperscalers like Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL, GOOG) and Meta (META) will slow their spending. And since they represent the lion’s share of Nvidia’s current AI chip sales, that would likely be a headwind to future revenue growth.
“The estimates for next year and the year after are completely out of control,” Luria said.
