There’s nothing wrong with admitting you were wrong. In fact, admission of a previous erroneous take can come in quite handy in the stock market. Rather than double down on a thesis that has proven to be incorrect and risk missing out on an opportunity, it’s best to make a U-turn and get in while you still can.
That, essentially, is the take offered by JR Research, a 5-star investor rated in the top 1% of the market stock pros, when looking at Nvidia (NASDAQ:NVDA).
Over the past year, Nvidia shares have experienced significant gains, driven by a series of earnings reports that have showed enormous growth and profits. Initially, JR Research viewed the market’s high expectations skeptically. Yet, having witnessed its dominance and how it has cemented its status as the “King of AI chips,” JR concedes he has underestimated the chip giant’s positioning.
“I must admit that I’ve gotten my bearish ratings on Nvidia consistently wrong over the past year, as I anticipated that Wall Street analysts were too optimistic,” the 5-star investor said. “As a result, I have reassessed my thesis to try and understand the bullish optimism underpinning NVDA stock, as I believe the market is always right (but analysis can be faulty).”
The proof really is in the pudding, borne out by the fact Nvidia has cornered the AI chip market, boasting a 90% share. Additionally, its full-stack approach consisting of chips, networking, and software should help keep at bay the challenge to its dominance posed by rivals such as AMD and Intel.
While it’s true NVDA is not cheap and never really has been, it still has a “markedly lower valuation than AMD,” which can partially explain why AMD shares have retreated significantly recently while NVDA shares haven’t suffered the same fate. Additionally, the fact AMD offered a cautious outlook on its recent earnings call suggests Nvidia “should retain the upper hand for some time.”
Add in the prospect of sustaining its growth trajectory via different levers – the new Blackwell architecture, growing sovereign AI demand from the Middle East, the launch of Nvidia AI Microservices – and JR concedes his “bearish thesis on NVDA can no longer be sustained.”
Accordingly, JR upgraded his NVDA rating from Sell to Buy. (To watch JR Research’s track record, click here)
That new assessment sits well with Wall Street’s overall take. NVDA stock boasts a Strong Buy consensus rating, based on 39 Buys vs. 2 Holds. The average target stands at $1,005.59, implying shares have room for ~11% growth in the year ahead. (See Nvidia stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
