Nvidia’s Stock Surge: Riding High or Ready to Burst?

Analysts have suggested it’s hard to see the sharp rise in Nvidia’s stock price after recording a fourth-quarter earnings surprise as a bubble. The factor that bursts a stock price bubble is a slowdown in sales, but the judgment is that Nvidia’s sales and operating profits can maintain a rapid increase.

On the 26th, Eugene Investment & Securities said, “After the launch of Chat GPT, the speed of Nvidia’s performance increase is dramatic. When you look at Nvidia’s sales and stock price, the stock price increase speed is a little faster than the sales growth speed, but there are no signs of sales slowdown or different direction in stock price increase,” it revealed.

Eugene Investment & Securities analyzed that the speed of Nvidia’s stock price increase is similar to the trend of Cisco during the dot-com bubble. At the time, Cisco’s sales and profits soared thanks to the Internet revolution and Y2K, but from 2000 to 2002, the performance deteriorated sharply, and so did the stock price. After the growth rate of Cisco’s sales slowed, Cisco’s stock price hardly recovered to its previous level.

Heo Jae Hwan, a Eugene Investment & Securities researcher, said, “It is hard to find signs of performance slowdown that Cisco experienced in the late 90s in Nvidia’s current performance. Currently, Nvidia’s sales and operating profit are exceeding expectations, and there are not enough signals to view negatively,” and maintained a positive view on AI semiconductors.

However, he also predicted that Nvidia would not be able to avoid the cycle of economic cycles. He saw that the stock price momentum will enter a lull phase after this week. Researcher Heo said, “If you look at the growth rate of Nvidia’s sales, it is on the rise. However, sales sharply slow down once every 3 to 4 years.” This means it is challenging to see Nvidia, the leading stock this year, soaring until next year.