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Nvidia (NVDA) has solidified its position as a leader in artificial intelligence (AI) by producing the most powerful chips in the industry. However, its success isn’t just about hardware innovation. The company has also capitalized on its CUDA software platform, which maximizes the potential of GPUs for AI workloads. CUDA has made Nvidia’s GPUs the gold standard for AI training and inference by standardizing a toolset for developers. This strategic advantage has helped Nvidia capture over 90% of the GPU market, making its platforms the top choice in the rapidly growing AI industry.
At the same time, Nvidia is expanding into new areas like quantum computing, which presents exciting opportunities. However, this expansion has also raised concerns among some analysts about the company’s future. DA Davidson analyst Gil Luria recently expressed doubts about Nvidia’s ability to sustain its growth through 2026, suggesting that the company may have peaked and that challenges ahead could slow its momentum.
The company has posted several years of triple-digit revenue growth, but some believe 2025 could be a turning point. With rising competition and a maturing market, Nvidia’s future is becoming less predictable. In this article, we’ll explore Nvidia’s impressive achievements, its ongoing advancements, and why some analysts think its best days may already be behind it.
About Nvidia Stock
Founded in 1993, Nvidia is a global semiconductor company known for its high-performance GPUs, primarily used in gaming and AI applications. With CEO Jensen Huang forecasting a $1 trillion investment in data centers over the next four years, Nvidia stands to benefit significantly, especially as the data center segment makes up 88% of its revenue.
Valued at $3.37 trillion by market capitalization, Nvidia shares delivered an exceptional performance last year, gaining 137% over the past 52-weeks. This surge significantly outpaced the tech-heavy Nasdaq-100 Index ($IUXX), which rose by 24% during the same period. This remarkable growth is largely attributed to the soaring demand for Nvidia’s highly sought-after AI chips, which are revolutionizing numerous industries that rely on intelligent machinery.
Why Does DA Davidson Remain Cautious on Nvidia?
On Jan. 15, DA Davidson maintained a “Neutral” rating on Nvidia with a price target of $135. While recognizing Nvidia’s financial strength, the firm projects a slowdown beyond 2025, citing challenges such as restricted sales to China and quality concerns with its Blackwell chips.
“We remain cautious on NVDA’s ability to meet consensus expectations for CY2026 and beyond,” said Luria. DA Davidson forecasts 2025 as a potential peak for the company, with 2026 expectations being the lowest among Wall Street estimates.
Despite these hurdles, analysts noted that supply-side disruptions might “actually prolong the cycle,” providing some short-term resilience. However, they stressed that sustained market demand will be the key driver of long-term success, emphasizing, “the longer-term driver will remain demand.”
The firm’s $135 target, based on a 35x multiple, reflects a conservative outlook and skepticism regarding Nvidia’s ability to sustain its meteoric growth trajectory. Investors should carefully consider these cautions against the backdrop of Nvidia’s recent momentum.
Nvidia Outperforms in Q3
On Nov. 20, the tech giant reported its third-quarter results for fiscal 2025, exceeding analyst expectations on both revenue and earnings. Revenue soared to $35.1 billion, nearly doubling compared to the same quarter last year, driven by a robust performance in its data center segment and strong demand for AI chips. The data center division generated $30.8 billion in revenue, marking extraordinary 112% year-over-year growth and surpassing the $28.82 billion analyst forecast.
CFO Colette Kress highlighted that Nvidia shipped 13,000 samples of its next-generation Blackwell chips, signaling a strong launch for these high-demand products.
Talking about profitability, Nvidia achieved EPS of $0.81, beating estimates by $0.06, while sustaining a gross margin of 75.8%, underscoring the company’s operational efficiency and cost management initiatives.
Looking ahead, Nvidia projects Q4 revenue of $37.5 billion, reflecting a 70% year-over-year increase. Analysts estimate EPS growth of 43% for fiscal 2026. CEO Jensen Huang expressed confidence in the sustained demand for AI systems, stating that “every customer is racing to bring Blackwell-enabled solutions to market.” This optimism highlights Nvidia’s pivotal role in the evolving AI-driven tech landscape.
Analysts tracking the company project annual revenue to reach $129 billion in fiscal 2025 and $196 billion in fiscal 2026, highlighting confidence in Nvidia’s growth trajectory
What Do Analysts Think About Nvidia Stock?
Despite DA Davidson’s cautionary outlook, analysts remain bullish on Nvidia’s stock prospects. On Jan. 17, Barclays analyst Tom O’Malley raised Nvidia’s price target to $175, citing the transformative AI capabilities of its Blackwell GPUs, which the analyst projects will drive an additional $15 billion in sales this quarter. Prominent analysts such as Beth Kindig and Dan Ives have emphasized the surging demand and robust growth in Nvidia’s data center segment. Kindig predicts a $10 trillion valuation for the company by 2030.
Overall, NVDA remains a “Strong Buy” stock among analysts with a mean price target of $176, implying approximately 32% upside potential.
The Bottom Line on NVDA Stock
Nvidia remains a highly compelling investment opportunity with multiple growth catalysts and analyst support.
However, Nvidia’s valuation raises some concerns. The company trades at a premium, with a forward earnings multiple of 49.6x, nearly double the sector median of 25x. Despite this, its trailing PEG ratio of 0.23x suggests the stock remains undervalued relative to its growth prospects, as a PEG ratio below 1x is generally considered attractive.
Overall, Nvidia’s appeal remains strong despite a “Neutral” rating from one analyst. I maintain that NVDA stock is a compelling long-term investment here.
