Analyst Warns Nvidia Faces Capacity Shortfalls, Issues Sell Rating
A Wall Street analyst predicts a significant shortfall in Nvidia's AI data center capacity, issuing a Sell rating.
A Wall Street analyst has issued a warning regarding Nvidia Corp.’s projected AI data center capacity, predicting a shortfall that could impact demand for its chips. Jay Goldberg of Seaport Research Partners maintains a Sell rating for Nvidia, setting a price target of $180, which is approximately 15% below the current market price.
Goldberg estimates that only 30 out of the 55 gigawatts of planned capacity for 2027 will be realized, leading to a potential shortfall of 45%. He cites shortages of electricians, gas turbines, and electrical connections as the main challenges contributing to this outlook.
Recent developments involving major tech companies underscore these concerns. Microsoft has withdrawn from an Nvidia-backed data center project in England, citing delays in obtaining electricity connections that could push the project’s start into the 2030s. Similarly, Amazon has encountered issues, with Nvidia servers awaiting adequate electrical supply in warehouses.
Goldberg also raises questions about Nvidia’s financial backing of smaller cloud providers, suggesting that loans and credit guarantees are effectively lowering chip prices. He believes that if smaller companies like CoreWeave and Nebius Group face financial challenges, Nvidia could see reduced sales and profit margins.
In contrast, research from SemiAnalysis presents a more positive outlook, reporting more than 24 gigawatts of capacity in advanced construction across 40 campuses. Their analysts noted, “Gigantic sites are simply getting built, and many are on time.” They contend that a delay in one data center does not necessarily mean Nvidia will lose a sale, as chips could be allocated to other customers with available resources.
Goldberg anticipates record sales for Nvidia into early 2027, but warns that risks may escalate in the coming year. On Polymarket, Nvidia’s chances of becoming the most valuable company by the end of 2026 fell from over 80% to 56%, with Apple gaining ground at 41%. Meanwhile, analysts remain generally optimistic, with a consensus price target around $328.72, a 54% increase from the current price.
