AI GPU giant NVIDIA Corporation (NASDAQ:NVDA) is in fresh spotlight after interesting developments over the weekend saw major AI CEOs unite and call for a slowdown in development. The firm’s products are the go-to items for AI data center computing, and Cramer discussed the developments in a tweet:
“Oh, and yes, Dario’s comments send Nvidia’s stock down four and then it works its way lower and then stabilizes. Yes, it’s a buy. But let it come down. The buyback’s not big enough. This stuff now happens in what seems like slow motion for me…”
The CNBC TV host’s remarks fit into his broader take about NVIDIA Corporation over the past couple of months. On multiple occasions, Cramer has bemoaned the weak share price and shared movements before markets open. His latest tweet about NVIDIA Corporation discussed the impact of Anthropic’s Dario Amodei’s remarks about the need to slow down development on the broader sentiment about the firm.
This sentiment is about the demand for NVIDIA Corporation’s AI GPUs. They are among the top performers and management continues to share metrics about future demand. For instance, CEO Jensen Huang outlined in March that the firm’s estimate of 3.6 million units demanded for the Blackwell GPUs underrepresented the accurate situation. Not to mention, as part of its Q2 release, NVIDIA Corporation outlined that its order backlog was more than $2 trillion.
Judging Cramer’s remarks, it’s clear that he’s in the bullish camp for the firm and believes that even if the stock does waver following Amodei’s remarks, the movement should be temporary. The AI boom continues to benefit NVIDIA Corporation as the firm grew its revenue by 106% annually during the second quarter. The impact of AI was clear as well, with the data center business accounting for $83.7 billion out of the $96.22 billion of the total revenue.
However, the growth is coming at a time when the global memory market is in a historic shortage. The impact of this shortage was evident on NVIDIA Corporation as well. While the firm’s Q2 gross margins were 75%, the Q3 guide projected a dip to 74% with the Q4 figure estimated to sit between 71% and 72%. Not to mention, the firm’s explosive revenue growth continues to reset the base to higher levels, and some, such as those from Seaport Global, have argued that as NVIDIA Corporation is sold out of capacity, it might find it difficult to generate capacity for additional upside surprises.
Looking at hedge fund sentiment, 285 out of 1,006 funds covered by Insider Monkey had held a stake in NVIDIA Corporation in Q2, while the figure was 275 out of 1,022 in Q1. A notable jump came in the form of GQG Partners, which increased its stake substantially to $590 million. Looking at the valuation, the stock trades at a forward P/E ratio of 24, which is lower than AMD’s 33 and Intel’s 55. Short interest as a percentage of float is lower than the other two.
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