Nvidia(NASDAQ:NVDA)is the undisputed heavyweight champion ofU.S.-based artificial intelligence enabled graphics processing unit manufacturers. The company’s growth is remarkable, despite critics. That’s actually beneficial for Nvidia stock.
The skepticism suggests that Nvidia and AI are not in a bubble and will not burst soon. The bears and sellers caused a slight decline in Nvidia’s share price. That’s perfectly fine, as corrective price action is healthy and necessary. So, there’s no need to lose faith in Nvidia now.
What Caused the Dip in Nvidia Stock?
Not long ago, Nvidiastock dipped from $135 to $118. That’s a pullback of 12% to 13%, and some fear mongers are licking their chops now.
To a certain extent, the excuse for the sell-off was some remarks that former president and current presidential candidate Donald Trump made.
He reportedly said that Taiwan “did take about 100% of our chip business.” Trump also stated, “Taiwan should pay us for defense,” and, “I wouldn’t feel so secure right now, if I was them.”
Wedbush analyst and tech bull Daniel Ives isn’t shaking in his boots. He believes that the “‘Trump trade’ does not ruin the AI Revolution thesis and tech bull market and to some extent it’s just a negotiation that will be a long and drawn-out process.”
That’s a sensible, levelheaded perspective. Taking a “This, too, shall pass” approach has worked out well for anyone who held Nvidia stock over the years.
Unless you really think that Trump’s remarks portend a prolonged, ultra-destructive trade war, it’s pointless to panic-sell your Nvidia shares.
The Bears Are Actually Helping the Bull Case
There’s an old nugget of wisdom that bull markets grow on skepticism. Can this concept apply to Nvidia and the AI market’s growth in 2024, though?
It certainly can. Despite Nvidia’s dominant market position, there are worry warts who try to conjure up fear and loathing. For example, we spotted an article declaring that Trump’s aforementioned remarks “should worry shareholders of Nvidia.”
Then, you’ve got Goldman Sachs analyst Jim Covello, who (according to Bloomberg) is waiting for the AI “bubble” to burst. There’s also Bahnsen Group founder David Bahnsen, who avoided Nvidia stock in anticipation of a potential “disaster.”
Bahnsen likened Nvidia and other technology megacaps in 2024 to the dot-com bubble of 2000:
“The way we make money is to not be holding the bag when the last sucker places that trade on Cisco in March of 2000 … A lot of people are going to lose money if they don’t trade out.”
It sounds like some commentators may be frustrated because they probably missed out on the Nvidia share-price rally. The presence of perma-bears and worry warts in the financial press suggests that 2024 isn’t a euphoric blowoff top like 2000 was.
Nvidia Stock Pulled Back so it Can Move Forward
The Nvidia share price declined by over 10% recently. Will you join the fear mongers and panic seller? Or, will you stay calm and understand that “This, too, shall pass?”
Amid the drawdown in Nvidia stock, Mizuho analyst Jordan Klein recommended that “some [investors] add on weakness and others buy if never owned given the pullback.”
That’s not a bad approach, and you can thank the Nvidia perma-bears as they’re just as important as the bulls and buyers.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
