3 Artificial Intelligence (AI) Stocks That Went Parabolic Can Plunge by Up to 78%, According to Select Wall Street Analysts

For almost two years, artificial intelligence (AI) has dominated the discussion on Wall Street -- and with good reason.

The ability for AI-driven software and systems to learn and evolve over time without human intervention gives this technology utility in most sectors and industries around the globe. The rise of AI is why the analysts at PwC forecast a $15.7 trillion lift to the worldwide economy by 2030.

However, previous next-big-thing innovations have consistently shown that not all participants will be winners, or at the very least sustain their parabolic moves higher. Although artificial intelligence has been a boon for a number of tech-driven companies, three AI-dependent highfliers can plunge by up to 78%, based on the price targets issued by select Wall Street analysts.

Nvidia: Implied downside of 28%

The first leading AI stock that went parabolic but could soon endure substantial downside, at least according to the prognostication of one Wall Street analyst, is semiconductor giant Nvidia (NASDAQ: NVDA). Analyst Gil Luria of D.A. Davidson is looking for shares of Nvidia to hit $90, which would represent a 28% decline from the nearly $125 they closed at on Oct. 4.

Nvidia's parabolic gains reflect it being the face of the AI revolution. Its H100 graphics processing unit (GPU) has effectively become the brains for high-compute data centers needing to make split-second decisions, run generative AI solutions, and train large language models.

Nvidia is also enjoying exceptionally strong pricing power for its H100, which has commanded a 100% to 300% price premium to competing AI-GPUs. Further, CEO Jensen Huang noted last week that demand for the successor Blackwell chip, which is faster and more energy efficient than its predecessor, is "insane."

Despite being on the leading edge of innovation for Wall Street's hottest trend, headwinds are emerging for this AI darling.

For example, Nvidia has competition coming at it from all angles. Less costly and more available AI-GPUs are logically expected to chip away at its monopoly like market share in AI-accelerated data centers over the coming quarters. Perhaps more importantly, Nvidia's four largest customers by net sales (all members of the "Magnificent Seven") are internally developing AI-GPUs for their data centers. This signals a reduced reliance on Nvidia's hardware in the future.

The company's insiders have given little reason for investors to cheer, either. Jensen Huang was a persistent seller of his company's stock for a three-month stretch between mid-June and mid-September. Meanwhile, not a single insider has purchased shares of Nvidia on the open market since December 2020. It sends a pretty clear signal that the company's stock isn't a good value.