NVDA Stock Feels Nervous Pre Earnings, Can Nvidia Justify Such Overvaluation?
Nvidia's forthcoming Q3 report is poised to be a pivotal moment for the whole AI sector, as markets are looking for evidence that the...
Quick overview
- Nvidia's upcoming Q3 report is seen as a pivotal moment for the AI sector, with investors questioning the sustainability of its high valuation.
- The company's stock has declined nearly 3% recently, reflecting growing concerns that its valuation exceeds current demand.
- Analysts have set unrealistically high expectations for Q3 revenue, with any underperformance likely to lead to significant stock declines.
- Long-term revenue forecasts for Nvidia appear overly optimistic, assuming a sustained AI investment boom without historical precedent.
Live NVDA Chart
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Nvidia’s forthcoming Q3 report is poised to be a pivotal moment for the whole AI sector, as markets are looking for evidence that the remarkable valuation remains justifiable.
Nvidia’s Q3 earnings release is being viewed less as an update and more as a potential trigger for an AI-sector reckoning.
1. Nvidia’s Momentum Has Turned Into Anxiety
Nvidia enters the week in a vulnerable state, with shares down nearly 3% on Monday and off roughly 13% from the euphoric highs above $212. The recent slide isn’t a blip — it reflects a growing belief that investors have pushed the stock far beyond what current demand can justify. Nearly the entire AI sector has been stumbling in lockstep, revealing how fragile the supposed “unstoppable” trend actually is.
Nvidia Chart Daily – The 50 SMA Looks So Fragile Now
The stock is now clinging to its 50-day simple moving average, a support level that has prevented deeper losses for months. But the market is increasingly treating that support line as an eggshell: one soft earnings report and it could collapse, opening the door to a far steeper selloff. AI names have been blowing up left and right this quarter, and traders know Nvidia is not immune.
2. The “This Isn’t the Dot-Com Bubble” Argument Is Starting to Crack
For months, Nvidia bulls have repeated the same comforting mantra: “This time is different — Nvidia is profitable.” But profitability alone doesn’t grant immunity from valuation insanity. Investors are falling into the classic trap of defending today’s bubble by using the logic of the last one.
Yes, Nvidia is printing money at a stunning pace. But the belief that profits alone make the stock safe is dangerously simplistic. A profitable company can still be wildly overvalued if the market bakes in a fantasy version of the future — and that’s precisely what’s happening here. Nvidia isn’t just priced for strength; it’s priced for infallibility.
The market is acting as if competition won’t escalate, demand won’t cycle, and margins won’t erode. This is not realism — it’s wishful thinking being sold as analysis.
3. Expectations for Q3 Are Unrealistically High
The consensus Q3 revenue estimate of $54.8 billion already assumes Nvidia overshoots its own guidance midpoint of $54 billion. But the problem goes deeper: analysts and traders are no longer satisfied with meeting expectations. The crowd is demanding a blowout — at least $55–$56 billion — just to prevent the stock from dropping.
This is a setup for disappointment. If Nvidia so much as delivers a “solid but not spectacular” quarter, the stock may be punished severely. The market has priced in perfection, and anything short of that will be interpreted as evidence of slowing momentum, even if actual performance remains strong by normal standards.
4. Long-Term Forecasts Border on Delusional
Street projections have spiraled into the realm of fantasy. Analysts are modeling $360 billion in revenue by 2028, nearly three times expected 2025 numbers and more than thirtyfold the pre-AI era revenue of 2020.
These forecasts hinge on the assumption that the current AI investment frenzy is not only sustained but escalates dramatically — an assumption with no precedent in the history of hardware cycles. Markets are behaving as if this is the first capital-expenditure boom in history that will never slow down.
5. The Margin Myth: The Biggest Red Flag of All
The most unrealistic belief, however, is that Nvidia will maintain 75% gross margins indefinitely. Investors are behaving as if competition simply won’t materialize. That would require AMD, Intel, custom cloud chips, and the dozens of startups currently burning capital to collectively fail — permanently.
Such margins are an invitation for rivals to attack. And they will. No trillion-dollar market ever remains uncontested. Nvidia’s current valuation effectively assumes 20 years of dominance in an industry notorious for rapid disruption. This isn’t sober forecasting — it’s speculative fiction dressed up as financial modeling.
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