NVIDIA (NASDAQ:NVDA) simply cannot be stopped. The world’s most valuable chipmaker hit record highs recently with shares almost hitting the US$700 per share mark. After coming back slightly, shares continued to climb yet again this week. So the question is, should investors buy the slight dip?
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Why the climb?
Before we get into whether investors may want to consider Nvidia stock or not, let’s look at why the tech stock climbed in the first place. The company achieved a record-breaking surge in market value for the month of January. This was the largest monthly increase ever, mainly focusing around the optimism that surrounds artificial intelligence (AI), as well as earnings projections.
AI in particular was a key focus. This came after Nvidia announced it would expand its AI offerings, and companies around the world were all ears. The chipmaker will provide new desktop graphics processors, as well as advancements for AI-related components and software.
Nvidia stock has now passed the trillion-dollar mark, with a current market cap of US$1.7 trillion as of writing. But that high market cap certainly does not come with value. And there are some fears that shares could collapse should interest rate cuts come later as opposed to sooner and investors take returns.
Which is why despite being an excellent company, I would consider this other tech stock instead.
Software optimism
With all this optimism about the future of software, it’s a great time to consider other tech stocks in the field. For this I would go straight to Kinaxis (TSX:KXS), with positive outlooks on fintech and payments strengthening the future of the tech stock.
The beginning of this year is likely to see conservative outlooks for software-as-as-service (SaaS) companies like Kinaxis stock. These companies have been making massive cuts, and Kinaxis stock is included. But this year that should lead to stabilization, and when interest rate cuts come, so too should more spending.
So while shares may not be demonstrating the same insane growth as Nvidia stock, I wouldn’t knock Kinaxis stock off your watchlist. After all, its revenue continues to grow at a solid compound annual growth rate (CAGR) of 21% over the last five years.
What’s more, it seems as though insiders have been using this opportunity to buy shares as well. And that certainly bodes well for today’s investor. Shares are now up 2% in the last year, and up 24% since bottoming out in October.
Bottom line
Both Kinaxis and Nvidia have strong balance sheets and portfolios to entice today’s investors. Furthermore, they have a solid outlook for the future, especially as the market and economy improve, as well as with lower interest rates. But if you’re going to choose one, Kinaxis stock simply offers far more value and less volatility.
The company continues to retain a high percentage of clients, all at enterprise level with not one taking up more than 10% of its total portfolio. This portfolio is also on a global scale, providing diversified revenue despite being a Canadian company. So while shares may wobble for now, this is a stellar long-term hold that’s only going to do better in 2024.
