Nvidia’s $4 trillion stock rally faces more threats than ever

Core Viewpoint - Nvidia is poised for significant growth with the upcoming release of its next-generation chips, Rubin, and remains a strong investment opportunity despite increasing competition and market fluctuations [1][4]. Company Performance - Nvidia is projected to achieve a 57% profit growth alongside a 53% increase in sales for the fiscal year ending January 2027, contrasting sharply with Apple's expected gains of around 10% [2]. - The stock has experienced a notable decline, losing approximately $460 billion in market value recently, yet it has still gained nearly 1,200% over the past three years [5][6]. Market Position - Nvidia commands over 90% of the AI accelerator market, but faces rising competition from companies like Advanced Micro Devices Inc. and major clients such as Alphabet and Amazon, who are developing their own chips [7][8]. - Despite the competition, demand for Nvidia's chips remains robust, with significant capital expenditures projected from major tech companies, totaling over $400 billion in 2026 [13]. Profit Margins and Valuation - Nvidia's gross margin is projected to be 71.2% for fiscal 2026, down from the mid-70s in previous years, but expected to recover to around 75% in fiscal 2027 [15]. - The stock is currently trading at 25 times expected profits over the next 12 months, which is a discount compared to many of its peers in the tech sector [16][17].