Nvidia (NVDA) shares have been on a wild ride lately. After the company reported its second-quarter financial results and offered some early guidance for fiscal 2028, the stock initially soared. But now it's trending lower, and investors are left wondering: is this a buying opportunity or a trap?

Whitney Tilson, a former hedge fund manager, has some thoughts. In a blog post this week, he laid out two very different scenarios for Nvidia over the next couple of years. The stock could double, he says, or the AI bubble could burst and take Nvidia down with it.

Whitney Tilson on NVDA Stock

Nvidia's second-quarter results beat analyst estimates, but it was the company's unofficial guidance for early 2028 that really stole the show during the conference call. Tilson noted that there's no sign of a slowdown in demand for Nvidia's chips, which are at the heart of the AI-infrastructure boom.

However, Tilson pointed out that while the revenue and earnings per share figures beat estimates, they were far from being "blowout numbers." The real headline was the guidance for revenue growth of 70% in fiscal 2028, which Tilson called "staggering." Nvidia said that growth would be more than 100% year-over-year if not for supply constraints.

But it's not all sunshine and roses. Tilson highlighted some writings from market experts that share the negatives from Nvidia's earnings report and conference call, including lower gross margin guidance and supply-chain commitments.

On the supply-chain commitments, Tilson is cautious. He worries that the company's strategy and growing commitments could "end poorly for Nvidia" if the AI bubble bursts. A report from the Wall Street Journal noted that being the middleman in the supply chain can be a strategic advantage and act as insurance, but it can also turn into a "painful liability." The Wall Street Journal compared the potential liabilities to Cisco Systems in 2001, when the company was on the hook for commitments to suppliers as the dot-com bubble burst.

Tilson also flagged another big risk: if OpenAI blows up, it "would roil the entire sector." And he thinks that's a real possibility. "I think this is likely," he said.

Buy or Sell Nvidia Stock Today?

So what's an investor to do? With the possibility of an AI bubble bursting and Nvidia's growing supply commitments, it's a tough call. But Tilson says Nvidia stock is currently cheap, trading at around 25 times current-year earnings per share and around 17 times next year's estimated earnings per share.

"These are very low multiples for a company this dominant, profitable and fast-growing. And if Nvidia hits its projected revenue numbers, earnings will be much higher than analyst expectations — and the stock could double in the next year or two. But that's a big 'if,'" Tilson said.

While Tilson views Nvidia stock as cheap based on P/E ratios, he said he only likes to "pound the table" on a stock like this when it's down at least 50%. For current Nvidia stock owners, Tilson says he wouldn't sell.

"As I've said many times before, you must let your winners run! But you might want to use a stop loss to protect your gains."