By now, Nvidia 's ( NVDA -4.18% ) business has been booming for so long that it's getting boring. As of the time of writing, shares are down by around 3% despite better-than-expected third-quarter earnings and a buoyant market for artificial intelligence (AI) hardware. But how much longer can the momentum last? Let's dig deeper into what the next three years could have in store. How good were earnings? Despite being the largest company in the world with a market cap of $3.6 trillion, Nvidia's business is still growing like a start-up. Third-quarter revenue soared 94% year over year to $35.1 billion, beating analysts' expectations of $33.2 billion. And the momentum was driven by its data center business, where it sells advanced graphics processing units (GPUs) for running and trailing AI algorithms. Nvidia also has tremendous pricing power, with a gross margin of around 75%, which suggests it is keeping the competition at bay. Management plans to maintain growth through new product releases, such as its Blackwell-based AI chips, which are expected to provide significant performance improvements over the previous generation of GPUs. However, while the results were great, investors should note that Nvidia's growth is decelerating. Over the previous three quarters, sales rose 122%, 262%, and 265%, respectively. This slowdown will probably continue as the company faces more difficult comps over the next three years. The AI industry remains highly speculative Analysts remain optimistic about the future of the AI industry, with Bain & Co. expecting it to generate revenues of $990 billion by 2027 -- up from just $185 billion last year. They believe businesses are moving out of the experimental phase to begin scaling AI tech into their operations, and huge demand could strain supply chains and cause shortages. If this plays out, Nvidia's already huge margins could get even higher. That said, analysts made similar predictions during the dot-com bubble in the early 2000s. And while the internet turned out to be a world-changing success, widespread adoption didn't come as quickly as expected. There are growing signs that a similar thing could happen to AI. According to The Economist , the disparity between investor enthusiasm about AI and reality might be untenable. They report that only 5% of U.S. businesses say they use AI in their products and services, and few AI start-ups are turning a profit. Most notably, OpenAI, the creator of ChatGPT, expects to lose around $5 billion this year because of huge outflows for employee salaries and the massive energy costs associated with running large language models (LLMs). In the best-case scenario, Nvidia can continue to make newer, more efficient chips that can perform more computational work with less energy requirements. This could bring down the costs of training and running AI models. But there are still many other variables like competition between LLMs, which could keep the software side of the industry unprofitable, even if operational costs begin to fall. All in all , the AI opportunity looks much more speculative and uncertain than the more optimistic analysts are letting on. Where will Nvidia stock be in three years? Over the next three years, investors should expect Nvidia's growth and margins to fall as investors become more realistic about the timelines needed to bring AI technology into the mainstream. That said, the stock's valuation seems to already price in this headwind. With a forward price-to-earnings (P/E) of 37, the company's shares look reasonable compared to its explosive growth rate, so the potential downside is limited.
Macquarie lowered shares of NIO ( NYSE:NIO – Free Report ) from an outperform rating to a neutral rating in a research report released on Wednesday, MarketBeat reports. They currently have $4.80 price target on the stock, down from their previous price target of $6.60. Several other equities research analysts have also commented on NIO. JPMorgan Chase & Co. raised NIO from a “neutral” rating to an “overweight” rating and boosted their price target for the stock from $5.30 to $8.00 in a research note on Friday, September 6th. Bank of America boosted their price target on NIO from $5.00 to $5.30 and gave the stock a “neutral” rating in a research note on Thursday, September 5th. Wolfe Research initiated coverage on NIO in a research note on Thursday, September 5th. They set a “peer perform” rating on the stock. Daiwa America raised NIO to a “strong-buy” rating in a research note on Monday, September 30th. Finally, Citigroup decreased their price target on NIO from $8.50 to $7.00 and set a “buy” rating on the stock in a research note on Wednesday, September 4th. One analyst has rated the stock with a sell rating, eight have assigned a hold rating, two have given a buy rating and one has assigned a strong buy rating to the company. According to data from MarketBeat, the stock presently has an average rating of “Hold” and an average target price of $5.91. Get Our Latest Analysis on NIO NIO Price Performance NIO ( NYSE:NIO – Get Free Report ) last announced its quarterly earnings data on Thursday, September 5th. The company reported ($2.21) earnings per share for the quarter, meeting analysts’ consensus estimates of ($2.21). NIO had a negative return on equity of 113.83% and a negative net margin of 33.41%. The company had revenue of $17.45 billion for the quarter, compared to analyst estimates of $17.49 billion. During the same quarter in the previous year, the company earned ($0.51) EPS. The firm’s revenue for the quarter was up 98.9% compared to the same quarter last year. Research analysts anticipate that NIO will post -1.39 earnings per share for the current year. Institutional Inflows and Outflows Large investors have recently made changes to their positions in the business. Allspring Global Investments Holdings LLC purchased a new position in shares of NIO during the 3rd quarter worth $32,000. Ridgewood Investments LLC purchased a new position in shares of NIO during the 2nd quarter worth $25,000. First Trust Direct Indexing L.P. purchased a new position in shares of NIO during the 3rd quarter worth $76,000. Apollon Wealth Management LLC purchased a new position in shares of NIO during the 3rd quarter worth $78,000. Finally, Baader Bank Aktiengesellschaft purchased a new position in shares of NIO during the 2nd quarter worth $53,000. Hedge funds and other institutional investors own 48.55% of the company’s stock. About NIO ( Get Free Report ) NIO Inc designs, manufactures, and sells electric vehicles in the People's Republic of China. The company is also involved in the manufacture of e-powertrain, battery packs, and components; and racing management, technology development, and sales and after-sales management activities. In addition, it offers power solutions for battery charging needs; and other value-added services. Further Reading Receive News & Ratings for NIO Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for NIO and related companies with MarketBeat.com's FREE daily email newsletter .WASHINGTON (AP) — President-elect Donald Trump on Friday offered a public show of support for Pete Hegseth, his embattled choice to lead the Defense Department, whose confirmation by the Senate is in doubt as he faces questions over allegations of excessive drinking, sexual assault and his views on women in combat. Hegseth, a former Fox News Host, Army National Guard major and combat veteran, spent much of the week on Capitol Hill trying to salvage his Cabinet nomination and privately reassure Republican senators that he is fit to lead Trump’s Pentagon. “Pete Hegseth is doing very well,” Trump posted on his social media site. “He will be a fantastic, high energy, Secretary of Defense." The president added that "Pete is a WINNER, and there is nothing that can be done to change that!!!” The pitched nomination battle over Hegseth is emerging as not only as a debate about the best person to lead the Pentagon, but an inflection point for a MAGA movement that appears to be relishing a public fight over its hardline push for a more masculine military and an end to the “woke-ism" of diversity, equity and inclusion efforts. Trump’s allies are forcefully rallying around the embattled Hegseth – the Heritage Foundation’s political arm is promising to spend $1 million to shore up his nomination – as he vows to stay in the fight, as long as the president-elect wants him to. “We’re going to earn those votes,” Hegseth said on Capitol Hill this week. “As long as Donald Trump wants me in this fight, I’m going to be standing right here.” The effort quickly become a test of Trump’s clout and of how far loyalty for the president-elect goes with Republican senators who have concerns about his nominees. Two of Trump's other choices have stepped aside as they faced intense scrutiny: former congressman Matt Gaetz , his first choice for attorney general; and Chad Chronister, a Florida sheriff who was Trump’s first choice to lead the Drug Enforcement Administration. The president's son Donald J. Trump Jr., also made a show of support for Hegseth on Friday, part of a full-court MAGA press. “If you’re a GOP Senator who voted for Lloyd Austin, but criticize @PeteHegseth, then maybe you’re in the wrong political party!” he wrote on X. referring to Biden's defense secretary. Hegseth has promised not to drink on the job and told lawmakers he never engaged in sexual misconduct, even as his professional views on female troops have also come under intensifying scrutiny. He said as recently as last month that women “straight up” should not serve in combat . He picked up one important endorsement from Republican Sen. Katie Britt of Alabama, whose support was seen as a potentially powerful counterweight to the cooler reception Hegseth had received from Sen. Joni Ernst , herself a former Army National Guard lieutenant colonel. “Huge. Thanks to Katie for her leadership,” Vice President-elect JD Vance posted on social media. Ernst, who is also a sexual assault survivor, stopped short of an endorsement after her meeting with Hegseth this week. She said she appreciates his military service and they “had a frank and thorough conversation.” On Friday, Trump put out the statement in response to coverage saying he had lost faith in Hegseth, according to a person familiar with his thinking who was not authorized to discuss it publicly. The president-elect and his team have been pleased to see Hegseth putting up a fight and his performance this week reiterates why he was chosen, the person said. They believe he can still be confirmed. If Hegseth goes down, Trump's team believes the defeat would empower others to spread what they cast as “vicious lies” against every candidate Trump chooses. Still, Trump's transition team has been looking at potential replacements if Hegseth's nomination cannot move forward, including former presidential rival Florida Gov. Ron DeSantis . DeSantis plans to attend the Army-Navy football game with Trump on Dec. 14, according to a person familiar with the Florida governor’s plans who spoke to the AP on condition of anonymity to discuss them before a public announcement. And DeSantis and Trump had spoken about the defense secretary post when they saw each other Tuesday at a memorial service for sheriff deputies in West Palm Beach, Florida, according people familiar with the matter who said Trump was interested in DeSantis for the post, and the governor was receptive. At the same time, DeSantis also is poised to select a replacement for the expected Senate vacancy to be created by Marco Rubio becoming secretary of state, and Trump’s daughter-in-law Lara Trump is seen as the preferred choice by those in Trump’s orbit. Despite a weeklong push of private Capitol Hill meetings, Hegseth is facing resistance from senators as reports have emerged about his past, including the revelation that he made a settlement payment after being accused of a sexual assault that he denies. The New Yorker cited what it described as a whistleblower report and other documents about his time leading a veterans advocacy group, Concerned Veterans for America, that alleged multiple incidents of alcohol intoxication at work events, inappropriate behavior around female staffers and financial mismanagement. The New York Times obtained an email from his mother Penelope from 2018, in which she confronted him about mistreating women after he impregnated his current wife while he was married to his second wife. She went on “Fox & Friends” this week to defend her son. Trump ally Sen. Markwayne Mullin, R-Okla., said senators are judging “Pete for who he is today.” In many ways the increasingly pitched battle resembles the political and culture wars that exploded over Trump’s pick of Brett Kavanaugh for the Supreme Court during his first term at the White House. Kavanaugh had also faced allegations of sexual assault that he strenuously denied, but Republicans rallied to his side and turned a tide of opposition into a more sympathetic view of the Supreme Court nominee as the victim of a liberal-led smear campaign. He eventually won confirmation. While Hegseth was still fighting for votes in the Senate, he did appear to make incremental progress with some Republicans who had expressed concerns about the reports of his drinking, in particular. “I’m not going to make any decision regarding Pete Hegseth’s nomination based on anonymous sources,” said Sen. Lindsey Graham, R-S.C. North Dakota Sen. Kevin Cramer said of the allegations against Hegseth, “I have no reason to doubt him any more than believe somebody else.” Still, Cramer indicated he could still change his mind. A background check “will be informative.” Sen. Mike Rounds, R-S.D., said after meeting with Hegseth that he wanted to see how he does in a hearing but “he went a long way” toward getting his support. Colvin reported from New York. Associated Press writers Michelle L. Price in New York, Adriana Gomez Licon in Ft. Lauderdale, Florida, and Mary Clare Jalonick, Kevin Freking and Lisa Mascaro in Washington contributed to this report.