3 Things Bears Have Wrong About Nvidia Right Now

There's no shortage of naysayers when it comes to Nvidia (NASDAQ: NVDA). Just 1.18% of its outstanding shares are currently being shorted, but think about what that means for a company with a market cap just above $5.5 trillion.

There are nearly $57 billion in short positions out there, and that doesn't include put options, bearish ETFs, or other derivative activity. The actual number of shares sold short has actually increased 40% over the past year, and the value of those bearish wagers has risen another 35% on top of that.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

The bears are everywhere, but I see that as more of an opportunity than a threat. Let's go over some of the knocks on Nvidia. I want to counter by pointing out what the worrywarts might be missing.

There is nothing that I love more than when a bear argues that a stock is "priced for perfection." The assumption is that current expectations are too high and that the stock is bumping up against the ceiling, with so much air below it on the way down to the floor.

Last month's fiscal second quarter was a perfect example of Nvidia stock perpetually scaling the wall of worry. Bears were banking on analysts aiming too high by targeting 97% in top-line growth. It would be the fourth consecutive quarter of accelerating year-over-year growth.

How is that possible with a company as large as Nvidia? Expectations were high . Reality was kinder. Here's a look at the company's top-line growth:

The late-August financial update gets even better. Those same analysts tagged by bears as overly ambitious are serial lowballers. They projected revenue would decelerate sharply to just 45% for fiscal year 2028, which starts in February. Nvidia shattered those crystal balls two weeks ago by forecasting 70% growth for next year.

Perfection isn't the ceiling. Market winners thrive in the debunking process.

2. Rivals will gain market share at Nvidia's expense

It would be naive for a bull like me to assume that Nvidia will be the king of the hill forever. Competitive advantages can weaken over time, just as they have been strengthening for years. A disruptor can pioneer a better mousetrap for the AI revolution or whatever giant tech trend comes next.