NVIDIA Corporation (NASDAQ:NVDA) was among the stocks on Jim Cramer’s Mad Money radar as he taught investors how to profit from the upcoming wave of takeovers. Discussing stocks that have declined in the second quarter, Cramer mentioned the company and its possible competitors.
Six: NVIDIA. NVIDIA, down just over 5% this month. At these levels, the stock sells at an incredibly cheap 22 times earnings. NVIDIA’s got an insane amount of business. So what’s keeping a lid on the stock? Well, the company has some powerful detractors, mainly clients that feel they charge too much, like Google and Amazon and Tesla. Hey, by the way, they’re customers. The first two claim that they have better chips than NVIDIA, even as they use NVIDIA. Plus, there’s Broadcom, vicious competitor, and CEO Hock Tan’s out there saying it can compete; it can take share from NVIDIA.
So how can it change its stock’s trajectory? Historically, I’d say they just need to keep reporting breathtaking results. The problem is the spectacular results haven’t driven the stock higher. Investors say it can’t continue. NVIDIA needs to get many more clients away from the Mag Seven, like sovereign wealth funds… And it needs to buy back stock hand over fist mimicking Apple during its historic run. The stock is that cheap.
In the end, I’m sticking with my view that you need to own NVIDIA, not trade it. But that would be a lot easier if Jensen Huang and his fabulous team declared a much, much bigger buyback than they have. They got the cash. I repeat, though, the issue is the narrative. NVIDIA’s at the heart of the data center. Almost every company with any component of the data center saw its stock soar this month. I know NVIDIA’s stock is the biggest in the world, but it needs to show it by telling us its stock is the best value of anything. It keeps buying share of other companies; buy it itself. That will change the direction of the price. It did for Apple. It will do it for NVIDIA.
Photo by Christian Wiediger on Unsplash
NVIDIA Corporation (NASDAQ:NVDA) develops accelerated computing and AI platforms, GPUs for gaming and professional use, cloud services, robotics and embedded systems, and automotive technologies.
While we acknowledge the risk and 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 and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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