Nvidia Soars to $2 Trillion on AI Hype, But Competition and Stretched Valuation Spell Uncertainty
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Nvidia's stock price has skyrocketed to a $2.13 trillion market cap due to its dominance as the AI infrastructure provider powering data centers.
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History shows that hot new tech trends like AI often get overhyped, sending related stocks soaring before eventually crashing back down.
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Increasing production of Nvidia's GPUs may erode its pricing power and gross margins.
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Nvidia faces growing competition from rivals like AMD and Intel, as well as tech giants developing their own AI chips.
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At 38 times trailing 12-month sales, Nvidia's valuation is stretched, with few historical precedents for such a high premium.