Forget about shares of graphics processing unit (GPU) maker Nvidia (NASDAQ:NVDA) for a moment. While the $3.2 trillion tech titan has been surging higher in recent weeks, thanks in part to the broader rebound in the tech scene, the stock could run into some strong resistance at just shy of $150 per share.
Undoubtedly, Nvidia’s breakouts tend to be steep and euphoric, especially if the reason for the rally is a quarterly earnings result that came out far better than expected. Either way, I wouldn’t chase the stock after soaring double-digits in just a few weeks. Arguably, much of the Blackwell (the name of Nvidia’s next generation of artificial intelligence, or AI, chips) tailwind is mostly expected at this point.
While I view Nvidia as a fantastic stock to hang onto for the long haul, I can’t say that I’m in a rush to back up the truck. Not with tariff risks lingering. With Donald Trump startling markets last Friday with more tariff chatter, perhaps it’s time to limit some exposure to the names that could suffer significant earnings hits at the hands of such levies.
In my view, it’s far better to expect the worst as one hopes for the best. In any case, hope is not a great investment strategy. And those who aren’t prepared for a tariff-hit earnings season may wish to think about rebalancing and rotating to the types of names that can continue flexing their muscles.
Shopify stock: A better comeback play than Nvidia?
While I’m still upbeat on Nvidia’s medium-term trajectory, I think there are timelier and better ways to play the continued rise of generative artificial intelligence (AI) and agents. In numerous prior pieces, I’ve urged investors not to ignore or discount the AI capabilities of e-commerce darling Shopify (TSX:SHOP). Sure, Shopify may not be considered a way to play the AI boom, but this could quickly change.
What’s more encouraging about Shopify’s AI game plan is that the firm has backed some potent innovative disruptors on the scene. Notably, AI agent developer Convergence is a Shopify-backed firm that’s starting to get some serious attention. As Shopify goes on the hunt for value in the AI agent scene, perhaps mergers and acquisitions could be a way for Shopify to level up its position in the so-called AI race.
At the time of this writing, SHOP stock is in retreat mode, now down just shy of 11% from May’s recent highs. Indeed, the April-May rally has ended in a painful correction. And while I wouldn’t give up on the stock now that its year-long relief rally is at risk, I think it makes sense to be very gradual with any buying. Shopify stock is no stranger to corrections.
Time to buy the correction?
Actually, it’s no stranger to bear markets, either, with the stock plunging more than 20% on three separate occasions in the past two years alone. Indeed, time will tell if SHOP stock is headed for another one of its nasty spills. Either way, Shopify fans should relish the opportunity to buy more shares of the e-commerce darling at lower prices.
While Shopify faces its own tariff risks, as I pointed out in a previous piece, I view them as more manageable, especially versus the likes of Nvidia, which does considerable business in China, a region where Trump has been most aggressive when it comes to tariffs.
