Wall Street is increasingly worried over the future growth opportunities for the two best-performing stocks in the market during the past year.
Chipmakers Nvidia and AMD shares are both down significantly in recent days. Nvidia declined more than 5 percent over the past week through midday Thursday, while AMD fell 12 percent in that time period.
The Nvidia decline was in part sparked by a negative Citron Research report on Nvidia Friday.
"Take your profits and move on to Google (Alphabet). Exposure to the identical array of 'sexy businesses' with less risk on the downside," Citron Research's Andrew Left wrote in a post entitled "NVIDIA: The Moment that Separates the Gamblers from the Investors. NVDA to Trade back to $130."
Left cited competition coming from Intel, Google and Xilinx in the data center markets and the likelihood of slowing growth in its gaming graphics card business as reasons for his skeptical view on Nvidia's market value.
Wells Fargo is also concerned over rising competition in Nvidia's data center business. The firm reiterated its underperform rating on the company Wednesday.
"We think that Nvidia has done very well in establishing itself as the dominant provider of standalone accelerator solutions for data center, but believe that this is already reflected in Nvidia's stock value," Wells Fargo analyst David Wong wrote in a note to clients. "Over time we think additional providers of standalone accelerators might emerge, helping to drive growth in the standalone processor market but reducing Nvidia's market share in this market."
Even with the move lower, Nvidia shares have rallied 218 percent through midday Thursday in the previous 12 months compared with the market's 17 percent return. That performance ranks No. 1 in the entire S&P 500, according to FactSet. AMD is right behind at No. 2 with a 156 percent return in the same time period.
In similar fashion to the negative Nvidia notes, Goldman Sachs told investors to sell AMD shares Monday, questioning whether the recent cryptocurrency-driven demand for the company's graphics cards will last.
"According to our checks, the RX 570 and RX 580 graphics cards are sold out at numerous retail websites including NewEgg and Microcenter. While this dynamic may provide near-term upside to fundamentals, we believe [cryptocurrency mining] is unlikely to become a sustainable driver of EPS," Goldman analyst Toshiya Hari wrote in the note to clients.
Nvidia declined to comment on the Citron and Wells Fargo reports.
An AMD spokesperson responded to the Goldman report by email:
"When we outlined our growth strategy at our financial analyst day earlier this quarter we didn't highlight cryptocurrency market as one of the drivers of growth for the business."