Seaport Research’s Concerns: Valuation and Deployment Risks

Seaport Research Partners surprised the market by issuing a Sell rating on Nvidia (NASDAQ:NVDA) with a $100 price target. They argue that AI-driven growth is largely priced into the stock.

“Nvidia stands as a key player in the AI spending boom, yet its future prospects appear well understood and reflected in the stock price,” noted Seaport in a recent analysis.

Key concerns highlighted by Seaport include:

• AI Gains Already Incorporated: The new Blackwell chips are sold out for 2025, limiting potential upside.
• Complex Implementation: Deployment challenges may impede customer rollouts and increase costs.
• ROI Uncertainty: Businesses are still searching for effective use cases for their AI investments.
• In-House Competition: Major cloud providers are developing their own AI solutions, posing a threat to Nvidia’s core clientele.

Modeling the Risks: DCF Analysis

The $100 price target from Seaport originates from a discounted cash flow assessment using a 7.5% long-term growth rate and an 11.5% discount rate, predicting diminished free cash flow growth once AI budgets stabilize in 2026.

Diverging Analyst Opinions

While Seaport’s bearish view stands alone, the broader analyst community maintains an optimistic outlook. Current consensus for Nvidia’s 12-month price target is approximately 30% above present levels, indicating a significant divide between Seaport’s cautious stance and the average market expectation.