Nvidia Corporation Challenges in core markets could lead to NVDA (NVDA, Financial) potentially falling as much as 50% to $65 per share, according to analysts. While Nvidia has been enjoying robust growth due to surging demand among those technology companies and for their graphics processing units (GPUs) for AI applications, there are some risks to the firm's valuation.

A big driver of Nvidia's revenue, training weights (AI model training) can recede as diminishing returns kick in for more massive models. The use of high-quality training data and the completion of initial training phases of major companies may lead to a decrease in GPU provisioning expenditures. This could also lend favor to competitors such as AMD and Intel when it comes to stealing Nvidia's top end chips meaning, the H100 from Nvidia's capture of the AI inference market.

Nvidia also has to contend with growing competition from other proprietary chipsets being developed by customers such as Amazon and Google. As Microsoft's GPU supply strain takes the final step back, it suggests the peak demand period is there too, likely putting the squeeze on pricing.

Over the next two years, Nvidia's revenues, up nearly three times in the last 12 months, may slow at the rate of only 10%. Analysts said this could reduce profit margins from the current 50 to around 35%. It's important to remember that Nvidia's price-to-earnings (P/E) ratio, at 44x, could undergo a huge drop to 25x should U.S. monetary policy start to change and/or Nvidia's growth stock status be reassessed.