NVIDIA's soaring, with only a few bears still "resisting in a corner".

This week, the artificial intelligence leader NVIDIA once again delivered explosive performance, achieving record-breaking revenue and profits for three consecutive quarters, igniting the entire chip sector.

After the financial report was released, Wall Street analysts raised NVIDIA's target price one after another, driving its stock price to double-digit gains on Thursday. However, despite the overall bullish sentiment, there are also bearish voices expressing concerns about NVIDIA's valuation being too high due to the enthusiastic atmosphere.

Specifically, DA Davidson stated that the fiscal year 2025 will be a great year for NVIDIA, but growth may not continue in fiscal year 2026 and beyond, with demand possibly declining in 4-6 quarters.

UBS pointed out that NVIDIA's revenue growth is expected to slow down due to factors such as the quarterly decline in total supply and rising operating costs.

Deutsche Bank believes that the recent and medium-term fundamentals still favor NVIDIA's development, but the profit potential has been fully reflected in the current valuation.

DA Davidson: Demand may decline in 4-6 quarters

DA Davidson pointed out that although the fiscal year 2025 will be a remarkable year for NVIDIA, growth may not continue in fiscal year 2026 and beyond, with the NVIDIA data center business possibly starting to decline continuously at some point in the next 4-6 quarters.

Revenue and profit expectations significantly exceeded forecasts, highlighting the strong earnings in the fourth quarter of the 24 fiscal year. It is clear that in the next year, NVIDIA will continue to dominate the field of artificial intelligence, with their customers expanding infrastructure rapidly, while their competitors are catching up.

Nevertheless, we still believe that a decline in demand in the next 4-6 quarters may be inevitable. The four major customers (Microsoft, META, Amazon, Google) are accelerating spending to meet current demand, but they describe their purchases as demand-driven, which means that once we approach the trough of disillusionment, they may cut back on spending. Clients like Microsoft are not interested in maintaining this level of capital expenditure indefinitely for artificial intelligence.

However, we maintain a neutral rating on NVIDIA and have raised our target price from $410 to $620 to reflect higher cyclical peaks. This is due to the increase in capital expenditure related to artificial intelligence computing by the four major customers this year, as well as innovative products serving as an additional growth driver this year. The H200 is expected to be launched next quarter, and the next-generation Blackwell architecture chip will be launched later this year.

UBS: Revenue growth to slow down

UBS pointed out that NVIDIA has been at seemingly infinite highs under the hype of artificial intelligence. The significant rise in Nvidia is due to the sustained strong demand for artificial intelligence computing capabilities. However, this may only be a short-term catalyst for the stock.

Analyzing factors such as the quarterly decline in NVIDIA's total supply and the increase in operating costs, its revenue may slow down to near stable levels in the next few quarters, with operating costs expected to increase by around 30% for the full year 2025. The strong demand for B100 may continue to show a significant upward trend. As delivery times shorten, the same value of supply can now drive more shipments within a given quarter, not to mention that NVIDIA's future capacity booking pressure may ease.

The gross margin has improved by approximately 100 basis points, providing stable guidance based on higher figures, but it is expected to decline by several hundred basis points in the future. Although a 75% gross margin is not doomsday, this temporary increase is due to a very mature H100 product now accounting for the majority of revenue, as well as efficiency improvements in NVIDIA's production and supply chain. With the launch of B100 products, the gross margin may decline, and lower gross margins may imply more intense competition.

UBS, while weighing its concerns, is also considering the fact of NVIDIA's continued demand growth:

Even though the delivery time for the H100 80GB GPU has been reduced from 8-11 months to 3-4 months, indicating higher efficiency and more direct revenue. In the past few months, NVIDIA's delivery cycles have significantly shortened, which is usually not good, but the demand for artificial intelligence computing power remains so strong, we believe this precisely indicates significant potential for shipment volume and revenue growth in the short term.

Overall, UBS believes that it may be too early to take a more cautious view now. They are slightly adjusting their expectations to reflect a possible slowdown in revenue growth, lowering the target price from $850 to $800, but maintaining a buy rating.

Deutsche Bank: Profit potential fully reflected in valuation

Deutsche Bank stated that NVIDIA's profit potential is fully reflected in its valuation:

As expected, NVIDIA achieved billion-dollar revenue growth for the fourth consecutive quarter, which the market has largely anticipated. Although not as "amazing" as in previous quarters, it is still impressive.

While delivery times may be compressed as supply increases, NVIDIA remains confident in the strength/quality of its demand channels, with its customer base expanding from traditional cloud service providers to numerous startups, sovereign entities, vertical industries, and more. Importantly, NVIDIA believes this widespread and diversified demand situation should continue to bring sustained revenue growth in 2025 and beyond.

Overall, we appreciate NVIDIA's significant quarterly revenue and profit growth and believe that the fundamental momentum in the near and medium term remains favorable for NVIDIA's development. **However, based on moderately high estimates and after a moderate cyclical adjustment in 2025, we believe that NVIDIA's profit potential is fully reflected in the current valuation of the company. We are raising the target price to $720 and maintaining a hold rating. **