Nvidia shares took a dramatic turn this week after Chinese startup DeepSeek announced an AI chatbot that uses significantly less computing power than expected. The news has sparked debate among investors and analysts, with some experts questioning the feasibility of DeepSeek’s claim.
However, one top investor, Trapping Value, is not convinced by the explanation. According to Trapping Value, Nvidia’s recent success is built on unsustainable profit margins, which are likely to collapse as AI technology becomes more commoditized.
Trapping Value cites several examples, including Meta and Microsoft, which have poured billions into AI projects but still report significant losses. The investor predicts that OpenAI could rack up $44 billion in losses by 2028.
The AI revolution may be losing its steam, warns Trapping Value, who rates NVDA shares a Strong Sell. This could mark the end of the semiconductor growth story and lead to a collapse in gross profit margins for companies like Nvidia.
Despite this warning, the majority of Wall Street analysts remain bullish on NVDA, with 37 Buy and 3 Hold ratings, giving it a Strong Buy consensus rating. However, Trapping Value’s sentiment highlights the ongoing debate about AI’s impact on the tech industry.
Source: https://www.tipranks.com/news/dont-wait-for-the-bubble-to-burst-says-top-investor-about-nvidia-stock