Three decades ago, the advent and proliferation of the internet altered corporate America's growth trajectory forever. After decades of impatient waiting by investors, the arrival of artificial intelligence (AI) looks to have an equally big impact on corporate growth.
While a laundry list of companies in and out of the tech sector has benefited from the rise of artificial intelligence, it's Nvidia (NVDA +0.10%) that stands atop the pedestal as its No. 1 winner. Nvidia's graphics processing units (GPUs) hold a virtual monopoly in AI-accelerated data centers, and its hardware, thus far, has been virtually unrivaled in compute capabilities. Its parabolic sales and profit growth explain how it rallied from a $360 billion market cap at the end of 2022 to north of $4 trillion.
But even Wall Street's most influential businesses contend with challenges. Although the future for AI hardware and applications remains bright, a pathway exists for Nvidia stock to do the unthinkable: lose over 50% of its value, relative to its all-time closing high, and fall to $100.
Image source: Getty Images.
Four collective catalysts can pull the rug out from beneath Nvidia stock
With the understanding that skeptics have been absolutely steamrolled by Nvidia over the last three years, the puzzle pieces appear to be falling into place for those who've questioned its parabolic ascent.
To begin with, every game-changing technology for the last 30-plus years has endured an early stage bubble that eventually burst. These bubbles form because investors overestimate the adoption and/or optimization of new technologies. While Nvidia's GPU sales show there's no issue with adoption, it'll likely take years before AI solutions are optimized for businesses. In other words, nothing points to AI escaping an eventual bubble-bursting event.
Secondly, Nvidia won't be the only show in town. Although its GPUs have proved superior on a compute basis, several of the company's top customers by net sales are developing chips for their AI data centers. Even though these AI chips aren't on par with Nvidia's, they're considerably cheaper and more readily accessible. The potential loss of data center real estate can work against the GPU scarcity that's helped fuel Nvidia's pricing power and gross margin.
NASDAQ: NVDA
Key Data Points
President Trump's tariff and trade policy can also help drive Nvidia stock to $100. Since Trump unveiled his tariff policy one year ago, trade tensions between the U.S. and the world's No. 2 economy, China, have been heightened. China hasn't purchased a single H200 AI GPU, putting a near-term ceiling on Nvidia's sales and profit potential.
Fourthly, the stock market entered 2026 at its second-priciest valuation over the last 155 years, according to the Shiller Price-to-Earnings (P/E) Ratio. Nvidia's price-to-sales ratio has also tipped the scales at levels that historically coincide with bubbles. The five previous times the Shiller P/E surpassed 30 since January 1871 were eventually followed by declines of at least 20% in one or more of Wall Street's major stock indexes.
While Nvidia's spot atop the AI GPU pedestal is no danger of being taken, the parabolic ascent of its stock may be no match for historical precedent. If history rhymes, once again, shares of Nvidia could tumble to $100 before the end of 2026.
