DA Davidson‘s tech analyst, Gil Luria, anticipates a deceleration in growth for Nvidia Corporation (NASDAQ:NVDA) despite the company’s impressive performance.
What Happened: While discussing Nvidia’s earnings on CNBC’s ‘Squawk on the Street’, Luria noted that while the chipmaker’s fiscal year 2025 revenue more than doubled year-over-year to $130.5 billion, the company’s growth is expected to slow down. “This is as good as it gets for Nvidia,” he told on Thursday as the stock continued to see a sharp decline.
According to Luria, the spending for Nvidia’s GPU chips by its most significant customers, such as Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and Amazon (NASDAQ” AMZN), has probably reached its highest point. “Two of their three largest customers have said capex will be flat into the first half of the year,” he stated. Luria also expects Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) to say so by the middle of the year. This is critical as just over one-third of Nvidia’s revenue comes from these three customers, as per the analyst.
Additionally, Luria also pointed out to Business Insider about the growing competition in the region, noting that Chinese labs are reportedly moving their inference workloads to GPU chips produced by Huawei. Additionally, the analyst sees Nvidia’s profit margin outlook as a key concern in its latest earnings report, as the company anticipates a gross profit margin of approximately 71% in the first quarter while managing the production ramp-up of its Blackwell GPUs.
Why It Matters: Analyst Gil Luria doesn’t have a bearish outlook on Nvidia. He has a $135 price target on the stock with a ‘Neutral’ rating. His primary concern lies in the pace of future growth. Nvidia’s year-over-year revenue increase for the fourth quarter reached 78%, marking its slowest quarterly growth in nearly two years. This slowdown raises questions about whether the company’s rapid expansion can be sustained.
Nevertheless, Luria’s worries contrast with those of others who have expressed confidence in Nvidia’s future growth. Anticipating a significant upside to the shares, JPMorgan explained that the first half of the year is usually weaker due to seasonal trends, but strong demand for PC gaming, data centers, and automotive sectors could help counterbalance this slowdown. Meanwhile, Rosenblatt analyst Kevin Cassidy views gross margin pressure and temporary networking weakness as near-term fluctuations.
Nvidia stock dropped 8.48% to close at $120.15 on Thursday, according to Benzinga Pro. It has plummeted over 13% in 2025
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
