After hitting all-time highs of US$974 per share, NVIDIA (NASDAQ: NVDA) has come back down to earth. Well, maybe only slightly. It still remains in the stratosphere as far as many investors are concerned.
Even so, this week marked Nvidia stock entering correction territory after shares have come down over 10% since hitting those highs. So the question is, “Is it time to buy?”
Jumping on board
Investors were quick to jump on Nvidia stock as the company hit correction territory of over 10%. The company surged in share price alongside artificial intelligence (AI) enthusiasm and semiconductor chip activity and interest remained strong.
It also helped that Morgan Stanley analysts raised the price target for Nvidia stock to US$1,000, up from US$795. Even so, there are quite a few other issues to contend with that could cause Nvidia stock to fall once more.
Interest rates were held steady here in Canada, and the consumer price index (CPI) actually rose by 0.4% over the previous month in the United States. This will continue to keep investors interested in Nvidia stock at an arms distance as they continue to keep cash on hand.
More competition
And there are more issues pouring in. Another is that Intel (NASDAQ: INTC) announced it would be rolling out its own version of an AI chip. This would be a direct challenge to Nvidia stock, which has seen growth on the back of this exact chip.
What’s more, the updated processor called Gaudi 3 will be available by the third quarter. It should also be faster and more power-efficient than the Nvidia version, H100. It will then boost performance in training AI systems, as well as running finished software. Meanwhile, Nvidia stock continues to be the main beneficiary. But that could soon change.
“People want an alternative,” Chief Executive Officer Pay Gelsinger said recently. “The world needs more suppliers, and we’re quite dedicated to providing that choice.”
What now
Not only is Nvidia aiming to get in on the action, they’re hoping to open up the arena for other competitors as well. And this could put a dent in Nvidia’s plan, which announced huge hopes for the next few years during its full-year earnings outlook.
While 2024 will continue to be a strong year for Nvidia, with more customers purchasing its products, 2026 projections could be lower. Just as with any stock, momentum can only last so long. And by 2026, there could be a downturn, though a normal one.
Despite Nvidia’s massive market share, customers will want to seek out the best option for the lowest cost. What’s more, Nvidia has partnered with some of these massive companies that won’t want to lose market share while they boost Nvidia.
So while Nvidia stock will likely continue to climb upwards in the next year, and even into 2025, by 2026 it might be time to consider cutting your losses. But for now, the company looks to be a solid choice, even as competitors attempt to get in on the action.
