Missed Out on Nvidia Stock? My Favourite AI Stock to Buy and Hold

Nvidia stock slumped by over 10% this week as DeepSeek came on the scene. So what now?

| More on:
A microchip in a circuit board powers artificial intelligence.

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

NVIDIA (NASDAQ:NVDA), the renowned titan in the artificial intelligence (AI) hardware arena, recently faced a significant jolt in the stock market. The catalyst? A Chinese startup named DeepSeek unveiled an AI model that not only rivals existing technologies. It does so with remarkable efficiency and at a fraction of the cost. This revelation sent NVIDIA’s stock into a tailspin, plummeting by over 11% in a single day.

What happened

DeepSeek’s achievement is particularly noteworthy because it developed its advanced AI model using less advanced chips, challenging the prevailing belief that cutting-edge hardware is essential for top-tier AI performance. This breakthrough has raised eyebrows and questions about the future demand for high-end AI chips – a market where NVIDIA stock has long been a dominant player.

The market’s reaction was swift and severe. Investors, spooked by the potential implications of DeepSeek’s innovation, initiated a broad sell-off of AI-related stocks. NVIDIA stock wasn’t alone in this downturn. Other tech giants like Broadcom and Meta also felt the heat, experiencing notable declines in their stock prices.

This sudden shift underscores the inherent risks in the tech industry. Companies heavily invested in AI infrastructure might find themselves vulnerable if newer, more cost-effective solutions emerge. NVIDIA stock, with its substantial investments in high-performance AI chips, now faces the challenge of justifying the value proposition of its products in a landscape where efficiency and cost-effectiveness are gaining prominence.

Another AI option

In contrast, Celestica (TSX:CLS), a Canadian electronics manufacturing services company, appears to be navigating these turbulent waters with greater stability. Specializing in design, manufacturing, and supply chain solutions, Celestica has been capitalizing on the growing demand for AI data centre infrastructure. Its diversified approach and focus on supporting AI applications have positioned the electronics firm favourably in the current market.

Financially, Celestica has been on an upward trajectory. In the third quarter of 2024, the company reported revenues of $2.5 billion, marking a 22% increase from the same period the previous year. The adjusted earnings per share reached $1.04, the highest in the company’s history, reflecting robust operational performance.

Looking ahead, Celestica has provided an optimistic outlook. For the full year 2024, they anticipate revenues of $9.6 billion, representing 21% growth. The company also projects an adjusted operating margin of 6.5%, indicating improved efficiency and profitability.

Foolish takeaway

The contrast between NVIDIA stock’s recent challenges and Celestica’s steady performance highlights the importance of adaptability in the tech industry. While NVIDIA stock grapples with emerging competition and questions about its high-end product demand, Celestica’s diversified portfolio and focus on supporting various facets of the tech ecosystem provide a buffer against such disruptions.

Investors seeking opportunities in the tech sector might find Celestica’s approach appealing. Its emphasis on supporting AI infrastructure, combined with a track record of financial growth, positions them as a potentially more stable investment compared to companies facing direct competition in the AI hardware space.

So, while NVIDIA’s recent stock decline underscores the volatile nature of the tech industry, companies like Celestica demonstrate the value of a diversified and supportive role, especially in a tech ecosystem that can offer resilience and sustained growth. As the landscape continues to evolve, adaptability and strategic positioning will be key determinants of success.

Should you invest $1,000 in TD Bank right now?

Before you buy stock in TD Bank, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and TD Bank wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

calculate and analyze stock
Tech Stocks

The Canadian Stock I’d Buy Every Time it Takes a Dip

The tariff wars have created a buy-the-dip opportunity for value investors. Here is a Canadian stock that is a buy…

Read more »

jar with coins and plant
Tech Stocks

The Smartest Growth Stock to Buy With $1,000 Right Now

Here's a fundamentally solid, dividend-paying growth stock you can buy on the dip now to hold for the long term.

Read more »

e-commerce shopping getting a package
Tech Stocks

Shopify Stock Looks Like a Buying Opportunity Today

Let's dive into the pros and cons of owning e-commerce platform provider Shopify (TSX:SHOP) in this current environment.

Read more »

sale discount best price
Tech Stocks

2 Oversold Tech Gems for Canadian Investors to Scoop Up at Discount Prices

Shopify (TSX:SHOP) stock and another tech stock are worth buying today.

Read more »

Tech Stocks

Investing in Canada: Opportunities in Nutrien and Westshore Terminals

Nick and Iain discusses Nutrien and Westshore Terminals as potential investments for those seeking more domestic exposure, citing their roles…

Read more »

customer uses bank ATM
Tech Stocks

2 Canadian Bank Stocks to Shield Against Market Downturns

Anchor your portfolio with dividends and stability built to outlast trade war turbulence with Royal Bank of Canada (RBC) and…

Read more »

AI microchip
Tech Stocks

Move Over, BlackBerry: This AI Stock is the Real Deal for Canadian Investors

There are tech stocks, and then there are tech stocks that changed the game. And these two are part of…

Read more »

data center server racks glow with light
Tech Stocks

Got $1,500? 2 Tech Stocks to Buy and Hold Forever

Investing $1,500 in these Canadian tech stocks might be a small step now, but it could lead to big gains…

Read more »