Where Will Nvidia Stock Be in 3 Years?
As I expected, Nvidia's (NASDAQ: NVDA) rocket-ship rally is beginning to stall, with shares down by roughly 21% over the last 30 days. And while Nvidia is still a great company, the combination of a high valuation and low diversification leaves room for continued downside. Let's explore how recession fears and artificial intelligence (AI) fatigue could play out over the next three years.
It is impossible to predict a recession for sure, but data is pointing toward a possible slowdown in economic activity. In July, the U.S. only added 114,000 jobs compared to expectations of 175,000, while the unemployment rate hit 4.3% -- its highest level since 2021. And while the Federal Reserve is expected to stimulate growth by cutting interest rates, it might be too little too late to avoid a so-called hard landing. Rate cuts can be a helpful tool, but they can't magically fix every problem in a shaky economy.
For Nvidia, a recession could be a disaster. While the company has dominated the AI industry by producing cutting-edge graphics processing units (GPUs) needed to run and train these complex conversational algorithms, it can't prevent its business model from being undermined by macroeconomic factors outside its control.
Source Fool.com
