Nvidia’s Share Price May Not Have Hit Bottom, Warns Fund Manager
Nvidia’s stock may not have reached its lowest point, according to fund manager Dan Niles, despite the company’s 9% gain on Tuesday following a 16.9% plunge on Monday. Niles, founder and portfolio manager at Niles Investment Management, expressed concerns about the future of the company’s revenue growth, which has been a major driver of the stock’s performance.
Nvidia’s shares dropped $595 billion in market value on Monday, the largest single-day decline on record, after a Chinese startup, DeepSeek, announced its free and open-source AI large language model, built in just two months at a cost of $6 million, a fraction of the cost of other major players. This development has sparked concerns about the level of investment big tech companies, including Microsoft, will make in AI, and how that will impact Nvidia, a key AI chipmaker.
According to Niles, investors should be cautious about assuming that Nvidia has hit bottom. While the company could rebound from its massive decline, he predicts that if estimates of Nvidia’s revenue growth, currently at 50%, need to be revised to 20-30%, the stock could have a lot more downside potential.
Niles also expressed concerns about Microsoft’s investment in AI, citing the company’s significant spending on OpenAI, which has resulted in a significant increase in its capital expenditure. He predicts that Microsoft’s cap-ex could slow significantly, which could further impact Nvidia’s revenue and growth. The relationship between Microsoft, OpenAI, and Nvidia could also be strained, according to Niles, as Microsoft’s spending on AI has not yielded the desired returns. The future of this complex will require watching, Niles said.
