MW Nvidia's stock gets a rare sell call - due to 'mounting questions' about AI

By Britney Nguyen

A Seaport Research analyst also worries about geopolitical tensions

An analyst at Seaport Research Partners slapped a sell rating on Nvidia Corp.'s stock on Wednesday, citing a slate of concerns, including some around artificial-intelligence spending by its customers.

Despite being one of the winners of the ongoing AI boom, Nvidia's $(NVDA)$ "prospects are well understood and largely priced into the stock," Seaport analyst Jay Goldberg said in the note. The chipmaker's stock is down 21% so far this year, when factoring in a 2.7% decline Wednesday as of late morning.

Goldberg pointed to risks that could send the stock lower, noting that Seaport's research shows "significant complexity required" to deploy the company's systems, such as with cooling and "orchestration challenges throughout the supply chain," compared with traditional data centers.

Additionally, Goldberg said there are "mounting questions" over AI's usefulness, as Nvidia's customers seek returns on their large investments in the technology. The chipmaker's top customers are also making efforts to build their own chips.

See also: This common worry about Nvidia is 'laughable,' Morgan Stanley says

Goldberg said it's likely that significant AI spending will start to slow down in 2026.

"AI is probably not a 'bubble', but it may take many years before true utility becomes apparent," Goldberg said. "AI may do well this year, but [Nvidia's stock] is likely to underperform relative to peers."

Other risks cited by Goldberg include rising geopolitical tensions, specifically between China and the U.S., "which threaten both the company's cost structure and its ability to export product outside the U.S." In addition, he mentioned the rapid development of AI, which "may spur further acceleration of customer demand for products."

While Goldberg isn't yet listed on FactSet, none of the other analysts tracked there have sell ratings on Nvidia's stock.

Goldberg also issued a sell rating on shares of embattled chip pioneer Intel Corp. $(INTC)$, which he said "is fighting to survive." The chip company is losing share of the personal-computer market to Advanced Micro Devices Inc. $(AMD)$ It's also shedding market share for data-center central processing units to AMD and internal semiconductor efforts at major companies.

Intel "has no AI strategy, and has seen massive data center spend shifted to [Nvidia]," Goldberg said.

Goldberg assigned a buy rating to shares of Broadcom Inc. $(AVGO)$, which, like Nvidia, is a beneficiary of the AI boom. But unlike with Nvidia, the company's "prospects are not well understood by the Street and not priced into the stock," Goldberg said.

"Any time Nvidia loses share today it is to hyperscalers' internal chip designs, and Broadcom is poised to make a lot of money helping them bring those chips to production," Goldberg said, noting that Alphabet Inc. $(GOOG)$ $(GOOGL)$ and Apple Inc. $(AAPL)$ are among these customers.

Read: As Apple reports earnings, here's why $200 is a key stock price to watch

-Britney Nguyen

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April 30, 2025 11:52 ET (15:52 GMT)

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