Nvidia was falling on Tuesday. The chip maker's stock is down from recent highs and one analyst says a sharper fall is on the way.
Nvidia shares were down 4.01% at $836.41 in morning trading.
The stock has dipped following an initial spike in the wake of the company's GTC developers' event when it unveiled its new range of Blackwell chips. It is now slightly lower than before the conference started. While consensus estimates call for demand for Nvidia's graphics-processing units to power artificial-intelligence technology to be strong this year, the expectation is for growth to slow from 2025 onward.
D.A. Davidson analyst Gil Luria has a Hold rating on Nvidia stock and a $620 target price, which is among the lowest by any Wall Street analyst.
He argues that major AI chip customers such as Amazon.com and Microsoft are likely to shift a greater amount of their investment toward in-house hardware and calls for a "significant cyclical downturn by 2026" for Nvidia.
"A combination of shrinking [AI] models, more steady growth in demand, maturing hyperscaler investments, and increased reliance by their largest customers on their own chips don't bode well for Nvidia's out years," wrote Luria.
A shift away from Nvidia chips would depend on developers being willing to move on from the company's CUDA software for building applications. Nvidia CEO Jensen Huang has pointed to the company's software and a superior total cost of ownership -- measuring both direct and indirect costs of using its chips -- as reasons it will stave off competition, as well as a broader market of national governments as a reason for sustained growth.
The bearish view from D.A. Davidson is an outlier when it comes to Nvidia, with 53 Wall Street analysts holding a Buy rating or equivalent on the stock, according to FactSet -- compared with just seven with a Hold rating, and none with a Sell rating. The average target price on the stock is $972.95.