Nvidia share price to do an Alibaba?

Lifetime Membership Is this the beginning of the end for Nvidia share price? The meteoric rise of US chipmaker Nvidia has been nothing short of fascinating as the company’s market capital raced past an eye-popping US$4 trillion recently, making it the world’s most valuable company. Nonetheless, recent market’s concern about the end of global spending boom on artificial intelligence (AI) chips has led to a member of SG Wealth Builder questioning if Nvidia share price is prime for a collapse.

For background, Nvidia started life in 1993 as a start-up developing graphics processing units (GPUs) for video gaming. During IPO, Nvidia share price was trading at US$12 but after 5 stock splits, the adjusted IPO price became US$0.014. Fast forward a quarter century later, Nvidia share price turbocharged to a whopping US$175 after the company expanded its products to include AI, professional visualization, robotics, automotive and supercomputing. The explosive form of Nvidia share price has certainly minted numerous millionaires and billionaires globally, inevitably making Nvidia one of the hottest stocks in recent years.

However, what goes up must surely come down. Every investor knows the mantra that chasing a hot stock is always a dangerous tempting affair. I learned this the hard way when I bought shares of AEM, a Singapore chip test equipment maker, at the highest point ($5.22) in 2022. Subsequently, a series of corporate governance scandals and over-reliance on Intel for revenue led to the horror crash of AEM shares. Till now, AEM shares has not recovered. So yes, I am still licking my wound and still beating myself for the miscalculation.

Some may argue that it is not realistic to compare Nvidia and AEM as both companies operate in different segments, markets and have completely different profiles. Nonetheless, the basic investment principles still apply. One of the hard lessons for me is not paying sufficient attention to the company’s market share for its flagship products. While it is true that demand for next generation chip testing will grow with the proliferation of AI, AEM has not secured enough market share that makes it one of the leading semiconductor test equipment companies. Nvidia, on the other hand, is a different story.

Nvidia is synonymous with AI chips. According to reports from Mizuho Securities the investment bank, Nvidia held between 70% and 95% of the market share for AI chips in 2024. The impressive figure clearly reflects the dominance of Nvidia in the AI chips sector. In fact, mighty form of Nvidia share price has led to the company replacing Intel in the Dow Jones, underscoring the seismic shift in the chipmaking market.

Although having a dominant market share can be a useful driver for the share price, there are factors that can punctuate the form. An example would be Alibaba (NYSE: BABA), which collapsed from a high of USD310 in 2020 following Jack Ma’s public criticism of the Chinese government triggered a tech crackdown by the Chinese authorities. Till now, Alibaba has yet to return to its former glory day despite continuing to dominant the e-commerce market share in China.

The concern now is whether the US tariffs could cause Nvidia share price to do an Alibaba. In this article, I will share my insights on the near-term outlook for Nvidia share price.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested in Nvidia share currently. Whether Nvidia share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Nvidia share price to sink or swim?

Barring unforeseen circumstances, I am of the view that Nvidia share price should [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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