Nvidia Stock Forecast: Billionaire Buys Big, Dismisses AI Bubble Fears

Key Insights

• A top investor worth $12 billion is buying Nvidia stock aggressively.
• He dismissed concerns that there is an AI bubble going on.
• Key valuation metrics show that NVDA is trading as a value stock.

Nvidia stock price has moved sideways this year, continuing a consolidation phase that started in November. It was trading at $183 today, March 5, 14% below its all-time high. Still, a top billionaire believes that the stock will rebound and has bought 1 million shares.

Top Tesla Billionaire is Accumulating Nvidia Shares

Leo KoGuan, a top billionaire who made his fortune investing in Tesla, has become a top Nvidia backer. In an X post on Wednesday, he said that he had bought 1 million NVDA shares. He also plans to continue accumulating. At the current price, his investment is worth $183 million.

KoGuan dismissed the ongoing fears of an AI bubble that has pushed many stocks lower this year. He has a net worth of over $13 billion,

Some analysts have warned that AI is a bubble, pointing to the ongoing capital spending in the United States. The argument is that some of the companies making these investments will never achieve a return on investment.

A good example of this is OpenAI, which has pledged to spend over $1 trillion in capital expenditure by 2030. While its revenue is growing, experts argue that it will be difficult to recover all this investment.

Still, there are signs that Nvidia will continue benefiting from the industry growth. It will also get the advantage of ongoing investments by top hyperscalers and other companies in the industry.

IREN and Top Neocloud Companies are Boosting Growth

A good example of this is IREN, a Bitcoin mining company that is pivoting to the AI data center industry. In a statement on March 4, the company said that it will buy 50,000 new Blackwell chips from Nvidia.

While the cost is not public, analysts believe that each chip costs between $30,000 and $50,000. Assuming the lower range, it means that this order alone will be worth $1.5 billion.

Other Bitcoin mining companies are also accelerating their transition to AI data centers. It’s a move that will lead to higher sales for Nvidia.

A good example of this is Riot Platforms, which is under pressure from Starboard to accelerate its transition. Riot is initially focusing on AMD chips, but there is a possibility that it will ultimately move to Nvidia, which has the best chips.

Another company set to buy more Nvidia chips is Mara Holdings. They have secured a partnership with Starwood to accelerate the growth.

Additionally, large companies like Microsoft are planning to spend hundreds of billions of dollars in capital expenditure this year. A substantial sum of these funds will go to Nvidia.

All this is happening at a time when Nvidia is trading as a value stock despite its strong revenue and profitability growth.

Seeking Alpha data shows that the company trades at 22 times forward earnings, largely equal to the S&P 500 Index. This multiple is much lower than other companies. For example, Microsoft has a multiple of 25, while Tesla and Palantir have 196 and 115.

Therefore, based on its strong revenue growth and moat in the semiconductor industry, the company should command a higher valuation multiple.

Chart Analysis Points to an Nvidia Stock Rebound

NVDA stock trades at $183 today, inside an area it has remained at since November last year. Looking back on the weekly chart, we see that the stock has always had these pauses after a strong rally.

For example, it dropped by 43% from its highest point in March to its lowest level in April last year.

It remains above the dynamic support of the 50-week Exponential Moving Average (EMA). Remaining above this indicator is a sign that the uptrend remains intact.

Therefore, Nvidia’s share price will likely resume the uptrend and possibly move to $200 and above. This view is based on its strong technicals and its revenue growth.

The big moat in the semiconductor industry and record of doing better than estimates also play a crucial role in forming this speculation.

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