For years, NVIDIA has been Wall Street’s golden child, the driving force behind the artificial intelligence (AI) boom and the most valuable semiconductor company in history. But as the stock continues its meteoric rise, a growing number of analysts and hedge fund managers are now warning that NVIDIA (NVDA) may be dangerously overvalued—and even worth shorting before it hits $200 per share (post-split equivalent).
Is the AI king about to crash?
NVIDIA’s Growth Story—Too Good to Be True?
NVIDIA has enjoyed one of the hottest runs in market history. Fueled by massive demand for AI data centers, its revenue more than tripled in two years, and its stock price surged over 500% during the AI trade. Firms like OpenAI, Microsoft, Meta, Amazon, and Google rely heavily on NVIDIA GPUs to train large AI models. Wall Street couldn’t get enough.
But now… the tone is changing.
Why Analysts Are Turning Bearish
Multiple catalysts are now pointing to a near-term correction:
1. Unsustainable Valuation
- NVIDIA now trades at earnings multiples higher than any major semiconductor stock in history.
- Price-to-earnings (P/E) ratio continues to stretch beyond 70, compared to TSMC at 25 and Intel at 14.
- Revenue has been front-loaded by AI hype, meaning growth is peaking.
“This is a classic overextension scenario,” one institutional analyst said. “The growth story is fully priced in—and then some.”
2. AI Demand Is Slowing
- Goldman Sachs noted slowing GPU demand from major hyperscalers in Q4 projections.
- Microsoft and Meta have begun developing their own AI chips to cut dependency on NVIDIA.
- AI startups funded in 2023 are now running out of cash, reducing GPU orders.
3. Competition Is Finally Catching Up
- AMD’s MI300 series is gaining market share in AI data centers.
- Google TPU v5 is cheaper for AI inferencing.
- AWS Trainium and Inferentia are replacing NVIDIA H100 GPUs in Amazon’s cloud.
“NVIDIA’s monopoly is eroding,” said a JPMorgan report. “Their margins will compress in 2025–2026.”
4. Hardware Supply Is Ballooning
- Production of H100 and Blackwell GPUs is accelerating, meaning less scarcity.
- Falling GPU prices expected in 2025 will hurt margins.
- Short-term stockpiling by big tech firms masks oversupply risk.
5. Geopolitical Risk: China Sanctions
- NVIDIA lost billions in GPU sales after U.S. export bans to China.
- China represented up to 25% of NVIDIA data center revenue.
- Workaround chips like H20 are delayed and at risk of new sanctions.
Short Sellers Are Lining Up
NVIDIA has become a top target for hedge funds, who believe the stock is in bubble territory:
- Short interest has risen to the highest level since 2022.
- Put options volume on NVDA surged 300% in recent sessions.
- Michael Burry-style funds are positioning for AI correction.
Some bearish analysts believe:
Fair value is closer to $100–$120/share
Bubble peak could hit $180–$200 before harsh reversal
Crash potential: –40% to –60% from current levels
Key Bearish Price Targets
| Firm/Analyst | Bearish Thesis | Target Price |
|---|---|---|
| Independent Hedge Fund | GPU oversupply & China ban risk | $110 |
| Technical Traders | Parabolic blow-off top incoming | $150 |
| Value Analysts | Valuation compression inevitable | $130 |
| Options Traders | Peak euphoria happening now | $180 (short trigger) |
What Could Trigger the Crash?
| Trigger Event | Probability 2025 | Impact |
|---|---|---|
| Big Tech shifts to custom AI chips | High | Severe |
| GPU prices drop | High | Moderate |
| U.S.–China escalation | Medium | Severe |
| AI market slowdown | High | High |
| Earnings miss | Medium | Severe |
Why the Crash May Be So Violent
NVIDIA’s insane rally was driven by momentum trading—not fundamentals alone. That means if sentiment flips, algorithmic funds will dump the stock rapidly. Margin calls and passive ETF flows will accelerate the fall.
This is classic bubble behavior:
- 1999: Cisco
- 2007: Financials
- 2021: Tesla
- 2025: NVIDIA?
Final Verdict
Is NVIDIA a great company? Absolutely.
Is NVIDIA a great stock at this price? Not even close, say many analysts watching the macro and AI cycle.
Conclusion:
- Short above $180–$200, says growing consensus among hedge funds.
- Crash of 40–60% is possible if AI expectations reset.
- The AI bubble hasn’t burst—but NVIDIA may be the first to fall.
