Nvidia (NASDAQ:NVDA) stock has been a much-chased stock by momentum hunters in recent years. With shares recently pulling back a bit alongside the rest of the tech markets, some may be wondering if it’s a good idea to be a net buyer on weakness. Undoubtedly, Nvidia continues to be an envied force within the AI scene, with its all-new Blackwell chips recently unveiled at its latest annual conference (also known as GTC 2024). The new line of chips may very well hit the market at a time when demand continues to be off the charts.
Though many consumers are satisfied with last-generation Nvidia chips (think the H100 chips), I wouldn’t be surprised if the same buyers return for the new generation. Indeed, when it comes to staying ahead in the AI wars, it pays to be heavily invested in the very latest hardware.
With interest rates likely to be trimmed over the coming few years, perhaps enterprises will be able to allocate a bit more of their budgets towards acquiring some of the hottest AI accelerators from the likes of Nvidia other other chip giants emerging across the scene.
Nvidia stock meets the bear again!
With NVDA stock flirting with its very own bear market (that’s a 20% drop from peak levels), I have mixed feelings about picking up a few shares (a starter position) at current prices. Indeed, it’s really hard to value NVDA stock, given just how cyclical demand for AI chips could turn out.
The early growth days of the AI era are (probably) far from over. But does that mean firms can’t take a break as they consider cheaper, lower-cost alternatives in the AI chip scene?
Definitely not. There may be cheaper AI chips out there that could eat into Nvidia’s share, but the juggernaut still arguably offers the most capable chips of the current generation. As such, I’d sit and wait for Nvidia stock to reach a stronger level of support, like in the $485 range, where shares of the GPU giant spent most of the past year fluctuating around.
If worse comes to worst and the tech scene crumbles further, there’s no question that NVDA stock could crumble even further. In any case, dollar-cost averaging (whereby one buys incrementally over time) may be the best way of investing in Nvidia stock after its many years of multi-bagger gains. That way, you won’t be kicking yourself if shares were to plunge 30% from current levels over a very rapid timespan, as you’ll be able to buy more shares at lower prices.
Shopify: A better value than Nvidia stock?
At the time of writing, I’d much rather be in shares of a software company that stands to gain from the rise of AI innovation. Think shares of e-commerce firm Shopify (TSX:SHOP), as it looks to upsell merchants with new products (many of which, I think, will be AI-focused) that could help them save time and perhaps a bit of cash. Indeed, running an online store is not easy.
The more value Shopify can bring to the table on the AI front, the more merchants can focus on growing their businesses. Higher sales and margins for merchants mean a bit more to spend on Shopify’s tools. Indeed, AI may very well represent a new moat source for the firm as it looks to empower small businesses and enterprises as well!
Recently, Shopify stock rose a bit after a big upgrade from a big-name bank that now sees the valuation as reasonable after the latest pullback to around $95 and change. I’m in agreement. Shopify has room to grow its market share, all while it goes heavy on AI innovations.
