Wall Street Analysts Are Bullish on This Artificial Intelligence (AI) Stock. Here's Why I'm Not.

It's an understatement to say that Wall Street analysts are bullish on Nvidia (NASDAQ: NVDA).

FactSet tracks 64 analyst ratings on the chip designer's stock. And 51 of them rate Nvidia a buy in that system -- the highest available grade, equivalent to a strong buy on most rating platforms. Nine more call Nvidia an overweight opportunity, and the last four have settled for a hold. None of the 64 financial firms are going below that level.

The consensus price target stands at $149 per share, 29% above Nvidia's current share price. Long story short, analysts absolutely love the stock, and they highly recommend buying into it in the current market.

I'm not so sure, though. Let me tell you why.

Why I'm holding Nvidia shares but not buying more

Don't get me wrong: I own a couple of Nvidia shares and have no intention of selling them any time soon. As long as the artificial intelligence (AI) boom has legs, Nvidia will be a front-runner for every contract regarding high-performance AI accelerator chips.

This is the hardware designer behind most of today's leading large language models (LLMs), including OpenAI's groundbreaking ChatGPT system. These bona fides are more than enough to keep Nvidia relevant for years to come.

But I am not interested in buying more Nvidia shares today, and it's probably a better idea to trim your holdings if you saw big gains on them over the last two years.

In fact, I took that step in February, locking down a 320% gain on about half of my Nvidia positions over a span of 20 months. It wasn't a perfectly timed sell, but market timing never works anyway.

Nvidia's stock has gained 77% since then, and I don't mind missing out. I'm just happy to have reinvested some of my Nvidia winnings in more promising growth stocks, shielding the majority of that winning investment from potential price drops.

And I wouldn't be surprised to see some steep Nvidia price cuts from this lofty valuation.

The risks Wall Street might be ignoring

Again, Wall Street's finest professionals either disagree with me or are willing to take the risk. That fact doesn't change my Nvidia analysis. Stock market analysts are not always right, despite their years of experience and access to expensive analytical tools.

In this case, lots of investors are shrugging off the company's competition. At the same time, the stock continues to trade at incredibly rich valuation ratios. That's a bad combination -- Nvidia's market makers are ignoring serious risks that really should keep a lid on the stock's valuation.