Nvidia Stock Outlook: Concerns Over GPT-5 and Rising Tariffs

A plot twist just hit Nvidia, where it is caught up in its very own thriller drama. The company found its way under some heat, not because someone accused it of why it missed earnings, but rather why it is too closely linked to the launch of OpenAI’s GPT-5. Tossing in some trade tariffs and other gossip, suddenly, a market darling is trying to handle more plots than it might want to keep track of. This clearly shows us that in the world of tech investing, current winners can all too easily become a cautionary tale in the future.

Lynx Equity has downgraded Nvidia’s stock  just a few days away from the company’s much-awaited earnings release. While keeping the same $160 price target, Lynx expressed some doubts regarding the direction of the stock. Nvidia shares are now trading near their 52-week high of $184.48, with a jaw-dropping P/E ratio of 58x and a remarkable 86% year-over-year growth in revenue. However, as per InvestingPro’s valuation model, the stock is trading above its fair value, with more than 20 additional key insights accessible.

Concerns around the fallout of GPT-5

As per Lynx Equity, the downgrade for Nvidia is due to the cold response recorded for OpenAI’s current work on the GPT-5 model, which is running on Nvidia’s NVL72 platform using its GB200 GPU. Negative reviews forced OpenAI to roll users back to its earlier GPT-4 models due to complaints. Reports even suggest a canceled hackathon for at least one of the GPT-5 programs, which indicates a lack of enthusiasm. Lynx believes that if GPT-5 adoption slows down, demand for Nvidia’s new GB200 chips may falter, and rival models such as DeepSeek, Llama, and Claude may settle on the cheaper Hopper series that is less power-intensive and needs less cooling.

Tariffs Shadow Growth

Piling additional pressure on Nvidia is the rising tariff issue. Lynx pointed out that Nvidia is currently bearing a significant 15% export tax on China sales, which is a market on which its growth relies in the long term. The company cautioned that such taxes could spread to other markets, adding to risks and generating constant negative publicity. Although Nvidia brags about its spectacular fundamentals, such as a 70% gross margin and solid cash flow that can easily take care of the debts, the escalation of tariffs may strain future profitability and overseas growth.

Market Dispute & Outlook

Even with its downgrade, Lynx recognized Nvidia’s short-term momentum. The company anticipates Nvidia to provide “monster guidance” for FQ3, as cloud service providers increase GB200 capacity for training workloads. This has the potential to fuel a short-term rally, but Lynx thinks the stock will diminish in the weeks ahead. Morgan Stanley estimates October revenue at $52.5 billion, while some estimates reach as high as $55 billion. Deepwater Asset Management’s Gene Munster implied that Wall Street is devaluing Nvidia’s longer-term growth prospects, projecting top-line growth more towards 30-35% by 2026 compared to the consensus of 27%.

Industry Advancements

Aside from the earnings highlight, Nvidia keeps introducing new technologies. Its Jetson AGX Thor developer kit and manufacturing modules are now shipping. It is looking forward to advancing robotics through more AI computing capacity and efficiency. In terms of investment, Cantor Fitzgerald reiterated its Overweight rating, mentioning Nvidia’s position at the center of global AI infrastructure expenditures, which is supported by increasing capex from leading technology companies.

Competition is heating up at the same time, with Chinese chipmakers targeting tripling AI chip production by 2026, and Huawei gearing up to set up AI-centric chip plants by late 2025.

Bottom Line

Nvidia continues to lead the pack in AI and semiconductor spaces, but Lynx Equity’s downgrade points towards the vulnerabilities that are underlying, ranging from the disappointing GPT-5 launch to tariff headwinds. Although near-term earnings momentum could fuel volatility, the longer-term stance depends on Nvidia successfully maintaining demand for its innovative chips while crossing through regulatory and competitive challenges. Investors will be closely observing whether Nvidia’s next earnings call reiterates a bullish scenario or authenticates the Lynx’s caution.

The fundamentals of the company are still among the best in tech, with privileged margins and financial strength that many peers are in awe of. But Lynx Equity’s cautiousness is a timely reminder that even titans fall when the environment around them shakes. If Nvidia can survive GPT-5’s budding issues, beat tariffs, and establish rising demand for its GB200, the fundamental long-term bull scenario will be intact.