The company's high valuation has been boosted by its dominance in the market for high-powered, specialized graphics processing units (GPUs) used in generative AI programs. However, Rebellion has cautioned that the practicality and profitability of AI are still uncertain. The think tank also warned that Nvidia could struggle if the Federal Reserve decides to hold interest rates at a higher level for longer to combat inflation.
Key takeaways:
- Rebellion Research has warned that Nvidia's stock price has become a bubble and could crash at any time, similar to the 17th-century tulip mania and the 1990s dot-com bubble.
- Nvidia's stock has soared 180% this year, largely due to the rise of generative AI and the company's dominance in the GPU market.
- Despite back-to-back stellar quarterly earnings reports, Rebellion Research believes Nvidia's stock is overvalued at its current price and could struggle if the Federal Reserve increases interest rates to combat inflation.
- Rebellion Research uses probability models to generate market predictions and has compared Nvidia's current valuation to several high-profile financial bubbles from the past 400 years.