With an AI bubble inflating, should I sell Nvidia in my Stocks and Shares ISA?

Nvidia (NASDAQ:NVDA) has done incredibly well for me since I rebought it for my Stocks and Shares ISA in April. Back then, President Trump gave long-term investors like myself an incredible gift/dip-buying opportunity.

Thanks, Donald!

However, with everyone and their dog now talking about an AI bubble, what should I do with this stock? Let’s discuss.

Reasons I might sell

There are a number of reasons I would normally consider selling out of a stock. These include a weakening competitive positioning, low growth, and what I consider to be a riskily high valuation.

Sometimes I also see a better potential opportunity elsewhere. So I would sell or reduce my position to free up cash for that.

With this in mind, let’s take a look at each potential reason in turn.

Weakening competitive position?

Do I see Nvidia’s top dog status slipping in the AI space? Absolutely not.

Founder and chief executive Jensen Huang started the company’s recent Q3 earnings report with these words: “Blackwell sales are off the charts, and cloud GPUs are sold out.” 

In other words, Nvidia remains absolutely central to the ongoing artificial intelligence (AI) boom. Giant tech companies continue to snap up its AI chips because they’re the best around.

That said, many of these same customers are designing their own specialised AI chips. The big risk over the next few years is that the likes of Meta Platforms and Amazon dramatically reduce their reliance on Nvidia.

Also, Chinese chipmakers are making progress, and it’s possible that a Chinese tech firm emerges to challenge Nvidia on the global stage. China’s already incredibly advanced in robotics, for example. This is something for investors to keep an eye on (it could reduce Nvidia’s pricing power).

Weak growth?

As for growth, the numbers Nvidia continues to put up are truly astonishing. Q3 revenue rocketed 62% year on year — and 22% quarter on quarter — to $57bn. Earnings per share jumped 60%.

Of course, Nvidia’s growth is expected to slow somewhat moving forward, but that’s due to the law of large numbers. Not a lack of demand.

In fact, management said the firm has secured orders worth approximately $500bn for its current Blackwell and forthcoming Rubin chips across 2025-26.

Looking at this, I ask myself, where’s the weakness? I don’t see it.

Valuation and AI bubble chatter

What about a potential AI bubble? Well, if talk were just coming from well-known bearish investors, it might be shrugged off. After all, bears don’t need much reason to turn bearish.

But even the great and good of the tech world, including Alphabet boss Sundar Pichai, have all been warning about this risk recently. So some parts are probably overheating.

However, Jensen Huang remains bullish: “There’s been a lot of talk about an AI bubble. From our vantage point, we see something very different.“

Looking at the valuation today, it’s hard to argue this particular stock’s in a bubble. The forward price-to-earnings multiple is just 27.

Still, in recent weeks, I trimmed my Nvidia position to add to other growth stocks that have fallen by more than 25%. But with the firm still underpinning the AI revolution, I have no plans to sell out completely.

On the contrary, I think this top tech stock is worth considering buying on any significant pullback.

The post With an AI bubble inflating, should I sell Nvidia in my Stocks and Shares ISA? appeared first on The Motley Fool UK.

More reading

• Is the Nvidia share price heading for $110 in 2026?
• Nvidia: here are analysts’ new share price forecasts after Q3 earnings, and they’re high
• Is there no limit to the Nvidia share price after Q3 earnings jump?
• Should Nvidia shareholders think about taking profits before Q3 earnings?
• Here’s why the Nvidia stock price matters even if you don’t own it!

Ben McPoland has positions in Nvidia. The Motley Fool UK has recommended Alphabet, Amazon, Meta Platforms, and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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