Nvidia Soars on AI Chip Demand, But Slower Growth and Margin Pressures Loom
• Nvidia stock surged to new highs after successful CES 2024, but faces risks of margin compression in FY25 due to rising competition • Massive AI chip demand from companies like Meta supports near-term growth, but may not be sustainable long-term • Consensus estimates show explosive revenue growth ahead, but sequential growth expected to slow after FY25 • Historically, chip gross margins above 65% have been hard to sustain long-term with ample competition • After big rally, stock is expensive trading at 30x FY25 targets that could face downward revisions on margin hits