NVIDIA Corporation (NASDAQ:NVDA)- the AI powerhouse of the Magnificent Seven- is down 3.18% at the time of writing. Jim Cramer sheds light on what’s happening:
Some investors say there’s growing skepticism that things have peaked with Nvidia. According to Cramer, nothing is wrong. After all, we just saw the numbers, and they were great. The growing skepticism around the slowing rate of growth, increased competition, and the concern that investors are probably going to get less bang for their buck is misleading. There isn’t competition from companies such as Amazon, which makes some of its chips to meet specific needs considering Nvidia doesn’t have enough manufacturing capacity to meet demand.
That said, NVIDIA Corporation (NASDAQ:NVDA) has the best technology so far, so much so that it “welcomes competition”. The fact that Amazon makes some of its own chips, and remains Nvidia’s “happy” customer, probably reinforces Nvidia’s position as the go-to provider for premium, high-performance GPUs and AI chips, allowing the company to focus on its core strengths.
At the same time, many people don’t know that Nvidia also has software, Cramer says. The AI darling chip maker just unveiled a groundbreaking generative AI model named Fugatto. Fugatto is designed as a versatile tool for creating and modifying sounds using text and audio prompts. Jim Cramer states that it is an AI idea factory project and that the CEO occasionally puts out ideas like these to “get everyone thinking”.
Jensen’s strategy with Fugatto seems designed to spark big-picture thinking about Nvidia’s future, showcasing innovation reminiscent of what great companies used to do. While costly initiatives like this are rarer today, mega-cap companies like Nvidia continue to deliver value.
This is why Jim Cramer says:
“Don’t begrudge the mega caps—just buy them”
Our research director shared his views on NVDA’s earnings results here. He thinks NVDA stock can reach $170 within 3 months. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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