Earlier this week, Bernstein Senior Analyst Stacy Rasgon published a note on Nvidia (NASDAQ:NVDA) to clients with the following title: “Please don’t get your investment thesis from Twitter randos.” It may seem absurd that an industry leading expert who specializes in semiconductors and semiconductor capital equipment would have to write something under that heading. However, a recent development on X, the platform formerly known as Twitter, has thrust NVDA stock into the spotlight in an entirely new way.
More specifically, an anonymous stock market blogger who refers to themself only as “The Mad King” has laid out a conspiracy theory regarding NVDA stock. They argue that the graphics processing unit (GPU) sales that rocketed Nvidia to a trillion dollar market capitalization this year were inflated.
If that were true, it would certainly have industry-wide implications. But as it turns out, evidence points to the contrary.
NVDA Stock: Red Flags or Just Smoke?
The Mad King’s post on NVDA stock is titled “Nvidia — The Red Flags.” Without revealing their identity, the author does issue a disclaimer in their post: “The information provided here is for informational purposes only and should not be considered as financial advice.” That suggests they aren’t a registered financial advisor. Instead, they are more likely someone who pays close attention to market trends and is concerned about Nvidia’s growth prospects.
Of course, there’s certainly an argument to be made that NVDA stock isn’t a buy right now. InvestorPlace’s Thomas Yeung recently compared Nvidia to Bitcoin (BTC-USD), arguing that a large-scale bet on either won’t end well for investors. Yeung also raised concerns regarding the company’s valuation and financials:
“Consider valuation. Today, Nvidia’s $1.13 trillion valuation represents a 240X multiple of trailing earnings, making it the most expensive tech stock based on normalized figures. Even if the chipmaker raises its net income 8X from $4.37 billion to $37.96 billion by fiscal 2026, the company would have to keep increasing that figure by 7.3% per year for the next two decades to justify its current share price of $470.”
These are valid concerns, especially given how much share prices have surged this year. However, the “red flags” that The Mad King sees with NVDA stock center around concerns that demand for Nvidia’s GPUs isn’t actually as high as experts seem to think.
The report discusses a company called Coreweave, named as an Nvidia client responsible for many GPU orders. The post cites multiple X/Twitter posts that allege suspicious activity between the two companies — on the grounds that Coreweave has taken loans from BlackRock (NYSE:BLK), one of Nvidia’s top shareholders.
Reasons Not to Short Nvidia
That might sound like some questionable activity at first glance. But Rasgon easily debunked these claims in his note, digging into what he recognized as a conspiracy theory. The analyst wrote, per MarketWatch:
“Beyond somewhat hilariously confusing ‘Blackstone’ with ‘Blackrock’ during the process, this is also nonsense […] Nvidia did not need help from Coreweave (or anyone) to juice the quarter (their products are all on allocation), and the debt facility was announced Aug. 3 (after the quarter was completed) with the release suggesting deployment has likely not happened yet.”
As noted in the report’s title, Rasgon makes it clear that social media hearsay isn’t a reason to bet against a company like Nvidia. The analyst maintains a highly bullish price target of $675 on shares as well as a “buy” rating.
Rasgon isn’t the only one, either. On TipRanks, 40 Wall Street analysts currently rate NVDA stock as a consensus strong buy, with only one hold rating. The average price target of $636.62 still represents significant upside as well, given the current per share price of around $462. All this suggests that the theories being floated on X/Twitter are just that — and shouldn’t be taken as a reason to short NVDA.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
