Cathie Wood Is Selling Nvidia Stock. Should You?

McKinsey estimates that companies will invest approximately $7 trillion in global data center infrastructure by 2030. Further, AI-related capex in the United States accounts for 5% of the GDP. These numbers put into perspective the potential for a chipmaker like Nvidia (NVDA). 

However, not everyone is bullish on NVDA stock. Cathie Wood’s ARK Invest has been actively rotating out of large-cap technology stocks. The ARK funds have offloaded a combined total of over 213,000 shares of Nvidia worth over $37 million.

This selling is in sharp contrast to Wells Fargo’s “Overweight” rating for NVDA stock with a price target of $265. Wells Fargo believes that Nvidia’s $1 trillion target for data center revenue is likely to be conservative. This view is backed by the point that the top five cloud service providers will be deploying “22 gigawatts and 25 gigawatts worth of AI in 2026 and 2027, respectively.” 

With structural industry tailwinds, strong fundamentals, swelling cash flows, and attractive valuations, NVDA stock might continue to create value. 

About Nvidia Stock

Headquartered in Santa Clara, Nvidia identifies itself as a global leader in AI and accelerated computing. The technology giant commands a market valuation of $4 trillion and is among the major beneficiaries of the AI-driven global infrastructure spending. 

Nvidia operates through two business segments: Compute & Networking and Graphics. Currently, the data center business (within the Compute segment) is the key growth and cash flow driver. Besides data centers, the company’s key markets include gaming, professional visualization, and automotive. 

With innovation as a differentiating factor, Nvidia has invested $76.7 billion in R&D since its inception. For FY26, the company reported revenue growth of 65% on a year-on-year (YoY) basis to $216 billion. For the same period, operating cash flow was robust at $102.7 billion.

While growth has been healthy and the industry tailwinds are likely to sustain, NVDA stock has remained sideways in the last six months. This seems like a good accumulation opportunity.

Clear Revenue Visibility

It’s worth noting that companies like Alphabet (GOOG) (GOOGL), Amazon (AMZN), Microsoft Corporation (MSFT), and Meta (META) are expected to spend $700 billion in 2026 towards AI capabilities expansion. Nvidia is a clear beneficiary of this spending. 

Further, Jensen Huang, CEO of Nvidia, believes that agentic AI is at an inflection point. This will translate into “incredible compute demand.” Therefore, the big capex spending will sustain beyond 2026 and will imply growth and cash flow upside for Nvidia. 

Nvidia receiving purchase orders from China is another growth catalyst. According to Wells Fargo, China is likely to contribute $25 billion in annual revenue. 

Amidst these positives, Nvidia has been creating incremental shareholder value through aggressive share repurchase. As cash flows continue to swell, it’s also likely that dividends will increase on a sustained basis. 

What Do Analysts Say About NVDA Stock?

Based on 49 analysts with coverage, NVDA stock has a consensus “Strong Buy” rating. While 44 analysts have a “Strong Buy” rating for Nvidia, three analysts have a “Moderate Buy” rating, and one analyst has a “Hold” rating. Among the bears, one analyst opines that the stock is a “Strong Sell.” 

The mean price target of $269.48 represents potential upside of about 52% from current levels, while the most bullish price target of $380 suggests that NVDA could climb 115% from here.

The overwhelming bullish view on NVDA stock is backed by the growth outlook and valuations. A forward price-earnings ratio of 21.55 is attractive considering the price-earnings-to-growth ratio of 0.55. 

As a matter of fact, Nvidia’s valuation has fallen to S&P 500 ($SPX) parity for the first time in over a decade. Considering the investment in AI infrastructure in the coming years, the current valuation seems like a good buying opportunity.