‘Cash out before profits,’ says top investor about Nvidia shares

Nvidia (NASDAQ:NVDA) enters its third-quarter earnings results this week with rising expectations, leaving investors wondering how long the incredible streak of triple-digit annual growth can continue. Although the company has forecast an impressive $32.5 billion in revenue for the third quarter, this figure signals a slowdown in quarter-over-quarter growth.

Ahead of publication, top investor James Foord suggests it may be time to move away from Nvidia, citing a mix of macroeconomic factors and company-specific concerns.

“NVDA faces competition, potentially slowing demand for AI and bearish technical indicators,” writes the five-star investor, who is in the top 4% of TipRanks’ stock professionals.

The recent re-election of Donald Trump adds another wrinkle to think about. Trump introduces new variables, with unresolved questions about his administration’s potential impact on regulation, trade and energy costs.

However, Foord also sees potential benefits for Nvidia in the changing political landscape. He highlights factors such as reduced regulatory burden and the prospect of more favorable financing conditions under the new administration, which could boost Nvidia’s prospects.

“Most major investments in data center buildouts are financed with debt, so a more favorable environment, i.e. lower rates, should allow this AI expansion to continue and perhaps even expand,” the investor opined.

Foord also dismisses concerns that trade barriers will reduce margins, arguing that inelastic demand for Nvidia products would allow the company to pass on any cost increases to consumers.

And yet the investor points to a number of other concerns that give him doubts. For starters, the market expects great things from Nvidia, and meeting these thirsty expectations is never easy.

“At this point, it will take a big surprise to satisfy investors,” Foord said, adding that the “big focus” will be on Blackwell chips and their 2025 prospects.

Moreover, recent misses from other industrial companies such as ASML and Applied Materials could be evidence that demand is slowing.

“I wouldn’t be surprised if Nvidia goes in the same direction as the other chipmakers next week, ahead of earnings numbers,” says Foord.

Another sign that things are about to take a turn for the worse is the net outflow of insiders and institutional investors in the third quarter.

‘Did the institutions time the summit well?’ asks the investor. Foord is clearly convinced that this is indeed the case and rates NVDA shares as Sell. (To view Foord’s track record, click here)

Foord’s pessimism seems quite an outlier. With 39 Buy and 3 Hold ratings, NVDA enjoys a consensus Strong Buy rating on Wall Street. The average 12-month price target of $163.26 suggests an upside of ~15% from current levels. (To see NVDA stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is for informational purposes only. It is very important to do your own analysis before making an investment.