• Culper Research has disclosed a short position against NVIDIA, arguing the stock is overvalued.
  • The firm points to increasing competition in the AI chip market and potential demand normalization.
  • NVIDIA's shares dipped following the report, though analysts remain divided on the bearish thesis.

Culper Takes Aim at AI Darling

Culper Research, the short-selling firm known for its detailed negative reports, has set its sights on NVIDIA, announcing a short position against the semiconductor giant. According to people familiar with the matter, the firm circulated a report to clients on Thursday arguing that NVIDIA's stock price has been inflated by unrealistic expectations around AI hardware demand.

"The market is pricing in perpetual dominance, but competition is heating up faster than many realize," a source close to Culper said. The report highlights the rise of custom chips from hyperscalers like Amazon, Google, and Microsoft, which could erode NVIDIA's market share in data center GPUs. Culper also flags potential normalization of AI spending as enterprises complete initial deployments.

NVIDIA's shares fell as much as 2.5% in early trading on Thursday before recovering slightly. The company's stock has surged over 200% in the past year, driven by insatiable demand for its H100 and upcoming Blackwell chips. A spokesperson for NVIDIA declined to comment on the report, and calls to Culper Research were not returned.

A History of High-Profile Shorts

Culper has a track record of targeting high-flying tech names, including a widely covered short against a cloud software company last year. The firm's reports often trigger sharp selloffs, but some critics argue they overstate near-term risks. In this case, while NVIDIA faces legitimate competitive pressures, its current earnings momentum and product pipeline remain robust.

Analysts are split. Morgan Stanley maintained its overweight rating, noting that "AI capex cycles are still in early innings." However, a note from a European bank cautioned that "valuation multiples leave little room for error."

The report comes amid growing regulatory scrutiny of AI and chip exports, adding another layer of uncertainty. For now, investors are watching whether Culper's bearish bet will gain traction or become another contrarian signal.

Correction: An earlier version of this article misstated the timing of the report's release. It was circulated Thursday, not Wednesday.