After shares of Nvidia ( NVDA ) hit a high of $950 on March 25, prompting a closer look at the company's long-term prospects. DA Davidson Managing Director Gil Luria joined Yahoo Finance Live to discuss why he believes Nvidia's continued market dominance is “highly unlikely.”
Luria says 2024 will be “an amazing year for Nvidia.” While Nvidia's top customers have made clear plans to buy more of the company's products, Luria says, “There's a lot of comfort in knowing that Nvidia will exceed its expectations.” However, he warns that market and technology trends could threaten this momentum, suggesting that Nvidia's current dominance “may not last very long.”
Luria predicted that Nvidia could face a “normal cyclical downturn” by 2026. He explains that despite the company's huge market share, its customers have an even bigger footprint on the landscape. If these customers continue to invest in Nvidia's chips at the current pace, the companies themselves could lose market share in the long run, casting doubt on the sustainability of Nvidia's revenue margins.
While Luria believes Nvidia will continue to grow in the short term, in the long term, he sees companies investing in their own custom-built chips to keep costs down. With an expensive price tag on Nvidia's GPU, “it's like driving to the grocery store in a gold-plated Ferrari; you don't need it,” says Luria.
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Editor's note: This article was written by Angel Smith
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