The Nasdaq index has hit correction territory, now sitting more than 10% below its all-time high. While this drop might raise some eyebrows, it’s worth remembering that corrections of this magnitude often happen annually. For investors, it’s crucial to recognize that such downturns are a regular occurrence.
So when these moments arise, there’s no need to panic. Instead, it’s an opportunity to hunt for stocks that have been battered more severely than the overall market. One standout value right now is Nvidia (NVDA), a leader among artificial intelligence (AI) stocks. Currently, it’s nearly 30% off its peak, making it an enticing bargain.
How Nvidia’s Stock is Holding Up
Nvidia develops graphics processing units (GPUs) that are essential for complex computational tasks. Their ability to handle multiple simultaneous calculations makes them perfect for AI training. Although competitors exist, Nvidia’s GPUs stand out for their exceptional performance, making it the go-to choice in the industry.
As businesses pour billions into AI infrastructure, Nvidia emerges as the key beneficiary. This demand has propelled its stock skyward over recent years, peaking at an astonishing 922% gain since the start of 2023. With such profits, it’s no surprise investors are cashing out, which hits Nvidia hard. Yet, powerful forces continue to drive Nvidia forward, presenting a golden opportunity amidst the biggest sell-off since its 2023 surge.
NVDA data by YCharts
Confident in Nvidia’s Future
The year 2025 is projected to see record capital expenditures from major tech firms, with substantial funds allocated to expanding AI capabilities. This trend favors Nvidia. Additionally, their latest chip architecture, Blackwell, is increasingly accessible, prompting clients to consider upgrades to more advanced GPUs.
These developments bode well for Nvidia’s stock, and Wall Street estimates a 56% rise in revenue to $204 billion this year. However, this outlook hinges on tech giants maintaining their hefty spending. There are concerns that economic challenges, like trade tensions, could cause them to pull back, potentially impacting Nvidia.
Yet, I foresee continued investment as these companies vie for AI dominance. If one company hesitates, another might press on to capture the competitive edge. With strong cash flows and substantial reserves, they can afford to maintain, if not increase, their AI investments.
While short-term volatility may worry some, the long-term gains from AI investment place Nvidia in a favorable position.
Nvidia’s Stock is a Bargain
Historically, Nvidia’s stock hasn’t often been labeled as affordable. Currently, it trades at 36 times trailing earnings and 24 times forward earnings—an unusually low point for this powerhouse.
NVDA PE Ratio data by YCharts
Given these valuations, it’s a prime moment for investors to jump in. While the timing of this correction’s end is uncertain, Nvidia is well-positioned to weather the storm and potentially thrive, largely due to ongoing AI investments.
I firmly believe Nvidia represents a compelling buy at this stage, though the market might continue to experience turbulence until positive news shifts the narrative.
