“Payouts before earnings,” top investor says of Nvidia stock

Nvidia (NASDAQ:NVDA) heads into Q3 earnings this week with soaring expectations, leaving investors wondering how much longer its incredible streak of triple-digit year-over-year growth can continue. Although the company has forecast an impressive $32.5 billion in revenue for Q3, this number signals a slowdown in quarter-over-quarter growth.

Ahead of the print, top investor James Foord suggests it may be time to step away from Nvidia, citing a mix of macroeconomic factors and company-specific concerns.

“NVDA faces competition, potential slowing AI demand and bearish technical indicators,” writes the 5-star investor, who sits in the top 4% of TipRanks’ stock pros.

The recent re-election of Donald Trump adds another wrinkle to consider. Trump introduces new variables with unresolved questions surrounding the potential impact of his administration on regulations, trade and energy costs.

However, Foord also sees potential benefits for Nvidia in the changing political landscape. He highlights factors such as reduced regulatory pressure and the prospect of more favorable financing terms under the new administration, which could bolster Nvidia’s outlook.

“Most of the big investments in building data centers are financed through debt, so a more favorable environment, i.e. lower rates, should allow this AI expansion to continue, perhaps even expand,” the investor opined.

Foord also dismisses concerns that trade barriers will lower margins, arguing that inelastic demand for Nvidia products would effectively allow the company to pass on any cost increases to consumers.

And yet the investor points to a number of other concerns that give him pause. For starters, the market expects big things from Nvidia, and it’s never easy to satisfy those thirsty projections.

“At this point, it will take a big surprise to please investors,” argues Foord, adding that the “big focus” will be the Blackwell chips and their 2025 outlook.

In addition, recent shortfalls from other industrial companies such as ASML and Applied Materials may be evidence that demand is slowing.

“I wouldn’t be surprised to see Nvidia go the same way as the other chipmakers ahead of earnings next week,” says Foord.

Another sign that things may be on the downside is the net outflows from insiders and institutional investors in Q3.

“Have the institutions timed the peak well?” asks the investor. In a clear belief that they actually have, Foord rates NVDA stock as a sell. (To see Ford’s track record, click here)

Foord’s pessimism appears to be quite aberrant. With 39 Buy and 3 Hold ratings, NVDA enjoys a Strong Buy consensus on Wall Street. Its 12-month average price target of $163.26 suggests ~15% upside from current levels. (See NVDA stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.