Nvidia shares reached an all-time high last week, surpassing Apple as the world’s largest company by market cap. The AI chipmaker has seen nearly 200% growth in its stock price this year, sending demand for its Blackwell GPUs soaring. However, investor Vladimir Dimitrov advises caution, warning of the “Curse of Dow additions,” which he believes can lead to underperformance.
Dimitrov notes that companies added to the Dow Jones index often struggle to live up to their hype, with high valuations driving unrealistic expectations. He believes sentiment around Nvidia has become overly optimistic, pushing its valuation higher than peers and pricing in a scenario where current growth rate is sustained beyond the near-term – a low-probability scenario.
While Dimitrov does not recommend selling Nvidia shares, he also doubts the company can outperform the broader market. His rating for NVDA is Hold (Neutral). In contrast, Wall Street analysts are largely bullish, with 38 Buy and 3 Hold ratings, but their consensus Strong Buy rating comes with a limited upside of just 4.5% – suggesting they think Nvidia is close to its near-term ceiling.
Despite this, investors can learn from other stocks trading at attractive valuations on TipRanks’ Best Stocks to Buy tool. Always do your own analysis before making any investment decisions.
Source: https://www.tipranks.com/news/beware-the-dow-curse-says-investor-about-nvidia-stock