Jim Cramer Issues Warning on Nvidia Amid Massive Gains and Antitrust Concerns

Jim Cramer has issued a cautionary note to investors regarding Nvidia Corp. (NVDA), predicting a significant potential market correction for the semiconductor company, which has experienced an impressive 174% surge in stock value this year.

Market Commentary

Cramer expressed his concerns about Nvidia in a post on X, formerly known as Twitter, stating, "Still no crescendo moment in Nvidia. It will happen, just not yet….the reversal will be vicious though….and fast." Following these remarks, Nvidia's stock saw a decline of 1.68%, closing at $132.00.

Regulatory Scrutiny from China

This warning comes at a time when Nvidia is under increased scrutiny from Chinese authorities, who have initiated an antitrust investigation into the company's acquisition of Mellanox Technologies back in 2020. The investigation aims to explore whether Nvidia is engaging in anti-competitive practices, particularly concerning the bundling of its artificial intelligence (AI) chips with Mellanox's NVLink technology.

Analyst Perspectives

TF Securities analyst Ming-Chi Kuo has indicated that the investigation may take some time to resolve, making comparisons to Qualcomm Inc.'s 15-month antitrust case in China. Although China accounts for only 5% of Nvidia's data center revenue, Kuo urged investors to brace for heightened regulatory scrutiny regarding Nvidia’s business practices, including its CUDA platform.

Nvidia's Market Position

Despite facing regulatory pressures, Nvidia continues to assert its dominance in the AI chip market, reporting a third-quarter revenue of $35.1 billion, which marks a remarkable 94% increase compared to the previous year. With a market capitalization of $3.21 trillion, Nvidia stands as one of the world’s most valuable companies, possessing a price-to-earnings ratio of 53.

Wall Street Outlook

Despite Cramer's warning, Wall Street analysts maintain a positive outlook on Nvidia. An average price target has been set at $170.56 by 40 analysts, with Rosenblatt Securities leading with a target of $220, while New Street Research estimates a lower target of $120, according to data sourced from Benzinga Pro.

Cramer, Nvidia, Antitrust