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When a renowned investor sells a substantial stake in a high-flying stock, it often raises eyebrows. Is it a signal to take profits or a subtle warning of challenges ahead? One such example of this is legendary investor Stanley Druckenmiller. His 13F filing for the third quarter revealed that he sold 214,060 shares of Nvidia (NVDA) - a move that caught the market’s attention.
Nvidia, the undisputed leader in artificial intelligence (AI) and graphics processing, has wildly outperformed the market over the last two years.
So, was Druckenmiller’s decision an example of an investor cashing in and taking profits, or a more worrying sign of something bad to come for NVDA? Let’s assess whether investors should follow suit or stay the course in this AI-fueled rally.
About Nvidia Stock
Santa Clara-based Nvidia (NVDA), founded in 1993, has evolved from a gaming GPU pioneer into a $3.6 trillion AI powerhouse. Dominating 80% of the AI chip market, its CUDA software ecosystem, embraced by 5.5 million developers, creates a formidable competitive edge.
Nvidia now powers AI-driven innovation across data centers, automotive tech, and enterprise software, cementing its leadership in fast-growing sectors. With groundbreaking innovations and a vision of reshaping the tech landscape, Nvidia’s early bets on AI and machine learning have paid off.
Nvidia’s stock has skyrocketed an astounding 543.9% over three years, eclipsing the S&P 500 Index’s ($SPX) 37.3% gain in the same time frame. In 2024, NVDA surged 178.8%, fueled by relentless demand for its AI-powered graphics cards, outpacing both the S&P 500 and the iShares Semiconductor ETF (SOXX). Nvidia shares reached a 52-week high of $153.13 on Jan. 7.
However, the rally may be stalling. Despite strong third-quarter results, Nvidia’s cautious Q4 revenue guidance and concerns over shrinking margins have tempered investor enthusiasm. Supply chain hurdles, tied to its highly anticipated Blackwell chips, further cloud its outlook.
In Q3 of its fiscal 2025, Nvidia returned $11.2 billion to shareholders, including $11 billion in share repurchases and $245 million in cash dividends. In terms of its valuation, Nvidia’s forward adjusted earnings multiple of 50.74x dwarfs the tech sector median, signaling its premium status.
Nvidia Beats Q3 Earnings Forecasts
Nvidia’s Q3 2025 earnings, unveiled on Nov. 20, showcased an extraordinary 94% annual surge in revenue, hitting $35.1 billion. Data center revenue soared 112% to $30.8 billion, powered by the runaway success of its high-performance H200 chip. Gaming revenue rose 15%, Professional Visualization grew 17%, and Automotive and Robotics leaped 72% year over year, painting a picture of broad-based growth. Adjusted earnings climbed 103% to $0.81 per share, surpassing analyst expectations and solidifying Nvidia’s position as a financial powerhouse.
CFO Colette Kress underscored the transformative potential of enterprise and industrial AI, projecting Nvidia’s AI Enterprise revenue to double in fiscal 2025. Anticipation for Nvidia’s Blackwell chips is mounting, with production shipments slated for Q4 fiscal 2025 and scaling throughout fiscal 2026. Demand is expected to outstrip supply well into 2026, a testament to its strategic alignment with tech giants like Dell (DELL), Oracle (ORCL), and Google (GOOG) (GOOGL), who have already integrated Blackwell into their systems.
Analysts expect Nvidia’s Q4 EPS to rise 61.2% year over year to $0.79, while the consensus revenue estimate of $38.05 billion hovers slightly above the midpoint of management’s own guidance. Looking ahead, fiscal 2025 EPS is projected to climb 135.6% to $2.78, with another 43.6% increase to $3.98 in fiscal 2026.
Druckenmiller Hits the Sell Button on Nvidia Shares
Stanley Druckenmiller’s decision to sell over 200,000 shares of Nvidia may seem surprising given the stock’s AI-fueled surge. While some have speculated it was a matter of the legendary investor giving up on Nvidia or on AI as an investing theme, Druckenmiller himself said it was a decision he regrets.
According to an interview earlier in 2024, Druckenmiller started selling NVDA shares after its impressive rally in 2023. He assumed the stock would not be able to rise much further, and took issue with its lofty valuation multiples. However, Nvidia continued to surge despite appearing overvalued.
The company proved him wrong, and he said he was “licking his wounds.”
Wall Street Gets More Bullish on NVDA Stock
Illustrating his regret, Nvidia just keeps climbing higher. Barclays analyst Tom O’Malley recently raised NVDA’s price target to $175 from $160, reiterating an “Overweight” rating. His optimism hinges on Blackwell GPUs, Nvidia’s next-generation processors poised to redefine AI acceleration. Compared to the Hopper architecture, Blackwell GPUs promise up to fourfold faster AI training and 30% improved inference tasks. O’Malley projects Blackwell will inject $15 billion into quarterly sales, potentially doubling next quarter.
Beth Kindig of the I/O Fund envisions a 50% surge in data center sales by fiscal 2026, propelled by Blackwell, with potential GPU sales exceeding $200 billion. Her ambitious forecast pegs Nvidia’s valuation at $10 trillion by 2030, a staggering 178% leap from its current market cap.
Wedbush’s Dan Ives adds another layer of intrigue, citing Blackwell’s demand-supply mismatch. Nvidia can currently deliver just one chip for every 15 requested, underscoring CFO Colette Kress’s Q3 assertion that “demand greatly exceeds supply.”
Analysts are highly bullish on NVDA, with a solid “Strong Buy” consensus rating. Out of the 43 analysts in coverage, 36 recommend a “Strong Buy,” three advise a “Moderate Buy,” and four analysts maintain a “Hold” rating.
The mean price target of $176.90 suggests upside potential of 21.4% from the current price levels. The Street-high target of $220 implies that NVDA could rally as much as 51%.
