"As AI bubble fears grow, shares of GPU titan Nvidia ( NASDAQ:NVDA) seem like a top candidate for some profit-taking, especially as things get a bit choppier and the momentum begins to taper further. Although it may not feel like it right now, Nvidia is still a major multi-bagger in the past two years, with over 240% in gains in the books."
"Either way, growing distaste for AI stocks and Dr. Michael Burry's very public bearish bets on Nvidia have put Nvidia in a rather difficult position. Shares of Nvidia are now sitting down more than 17% from recent highs, and while Burry might not be big in the money yet with his put options, it might not take long before he is, especially if Nvidia finds itself in a bear market by the time Santa Claus rally season and the new year ring in."
"Of course, there's a huge chance that big AI spenders have gotten ahead of their skis, and, as a result, might need to cut their spend in the new year, perhaps deeper than expected. Undoubtedly, AI demand is showing no signs of slowing down, but eventually, scaling laws might shift, and adding more GPUs to the mix might lead to diminishing returns. In the meantime, though, the hyperscalers seem more willing to keep on "flooring it" going into the new year."
Nvidia produced over 240% gains across two years but is up roughly 24% year to date. Shares have pulled back about 17% from recent highs amid widening AI bubble concerns and visible bearish bets from Dr. Michael Burry. Short-term momentum is tapering, prompting potential profit-taking by newer investors. Large AI customers might trim GPU spending next year if scaling yields diminishing returns, though hyperscalers continue aggressive investment. Nvidia still leads rival AMD in GPUs, leaving uncertainty about whether demand will drive another major advance in 2026.
Read at 24/7 Wall St.
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