Ryan Vanzo, The Motley Fool
5 min read
Nvidia (NASDAQ: NVDA) shares currently face a litany of headwinds.
The first challenge has been a correction across AI stocks. Not every AI stock has been targeted. But many industry suppliers have seen their share prices slashed by 10%, 20%, or even 30% in recent weeks. Both Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META), for example, have lost roughly 15% of their value over the past month.
Missed AI’s “Act 1”? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
The second challenge concerns CEO Jensen Huang’s affair with tech executive and investor Alice Huang, who faces allegations that she’s a Chinese spy. Nvidia issued a press release apologizing for its leaders’ actions, but uncertainty remains regarding potential regulatory actions. A second alleged affair — this one with Kimberly Powell, Nvidia’s vice president of healthcare — was later uncovered by The New York Times. Nvidia’s board was considering ousting Huang from his role, but on Thursday morning, he resigned. For now, Chief Financial Officer Colette Kress will step into the CEO role on an interim basis.
As difficult as those issues are for the chipmaker, the third challenge could have a lasting impact.
Major Nvidia customer Anthropic this week updated its pre-IPO filing with the claim that it had been able to adapt its Claude Mythos large language model to run on AMD‘s competing hardware in just three days. That success would drastically reduce Anthropic’s reliance on Nvidia chips, as it would dramatically reduce the moat created by Nvidia’s CUDA software platform.
As industry news site Wccf tech explains:
“Anthropic’s IPO roadshow material has one very interesting nugget: a slide that shows it took its Claude Mythos Preview model just around three days to figure out how to run another model on AMD’s MI355X GPUs vs. the 6-12 months that it typically takes to prepare a new compute platform for inference-related operations. Basically, Anthropic is now treating GPUs as fungible units of compute, with a significantly reduced barrier to switch from one platform to another. This is predictably leading some to declare that Nvidia’s CUDA moat might well be dead for all practical intents and purposes.”
In response, Wall Street has cooled further on Nvidia stock. To be clear, most analysts covering the company still maintain a “buy” rating on its shares. But in recent days, three of them have lowered their 12-month price targets. Notably, analysts at Robert W. Baird have lowered their price target from $500 per share to just $200. Additional downgrades or price target reductions may be in the cards as additional headwinds are digested.
