The recent surge in the stock market has been fueled by excitement surrounding the growing influence of artificial intelligence (AI) in various sectors. However, not all Wall Street analysts are convinced about the sustainability of this trend. Several well-known AI stocks could be heading for a major decline, with price targets suggesting potential losses of up to 88%.
One of the stocks under scrutiny is semiconductor company Nvidia, which plays a crucial role as the infrastructure backbone of the AI movement. Despite being the go-to for high-compute data centers, analyst Gil Luria of D.A. Davidson projects a 43% downside for Nvidia. Luria believes that Nvidia’s growth trends will start reverting to the trend line in the coming quarters, as the initial hype surrounding AI subsides. Furthermore, Nvidia faces increasing competition from companies like Advanced Micro Devices and Intel, who are developing their own AI-focused chips. This, coupled with the potential cannibalization of its pricing power, could spell trouble for Nvidia.
Another stock facing skepticism is Super Micro Computer, whose customizable servers are vital for enterprise-operated AI-accelerated data centers. Although the stock has seen tremendous gains recently, with a 751% increase over the past year, analyst Mehdi Hosseini of Susquehanna warns of a potential 66% downside. Overestimation of the adoption of new technologies and the possibility of supply constraints could hinder the growth of Super Micro Computer. Additionally, the company’s ability to defend its intellectual property could be challenged, leading to a loss of market share.
The automaker Tesla, often associated with AI due to its advanced autonomous driving technology, also faces skepticism from Wall Street. Analyst Gordon Johnson has a price target that implies an 88% downside for the company. Johnson’s cautious outlook is based on his earnings estimate for Tesla in 2025, applying a discount rate to arrive at the current price.
While the potential downside projected by these analysts might be at odds with the overall excitement surrounding AI, it serves as a reminder that not all stocks in this space may be destined for long-term success. Investors should approach AI stocks with caution, considering the potential risks and challenges they may face in the future.
FAQ section:
1. What stocks are facing skepticism in the AI sector?
– Semiconductor company Nvidia, Super Micro Computer, and automaker Tesla are facing skepticism in the AI sector.
2. What potential losses are projected for these stocks?
– Nvidia could experience a potential loss of up to 43%, Super Micro Computer could face potential losses of up to 66%, and Tesla could see potential losses of up to 88%.
3. Why is Nvidia facing skepticism?
– Nvidia’s growth trends are projected to revert to the trend line as the initial hype surrounding AI subsides. Additionally, it faces increasing competition from companies like Advanced Micro Devices and Intel, and there is potential cannibalization of its pricing power.
4. What are the concerns surrounding Super Micro Computer?
– Overestimation of the adoption of new technologies and possible supply constraints could hinder the company’s growth. There are also concerns about its ability to defend its intellectual property, which may lead to a loss of market share.
5. Why is Tesla facing skepticism?
– Analyst Gordon Johnson has a cautious outlook on Tesla based on his earnings estimate for the company in 2025, which implies an 88% downside.
Definitions:
1. Artificial intelligence (AI): the simulation of human intelligence processes by machines, especially computer systems.
2. Semiconductor: a material that has electrical conductivity between that of a conductor and an insulator. It can be used in electronic devices to control the flow of electrical currents.
3. Cannibalization: in the context of a company, cannibalization refers to the situation where a new product or service from the same company diminishes the sales of an existing product or service.
4. Autonomous driving technology: technology that allows a vehicle to operate without the need for human input, using sensors, cameras, and artificial intelligence to navigate and make driving decisions.
Suggested related link:
https://www.nvidia.com – Official website of Nvidia.
The source of the article is from the blog reporterosdelsur.com.mx