Is Nvidia’s Recent Slump a Buying Opportunity?

Shares of Nvidia (NVDA) dropped to a 6-week low last Thursday and are down more than -16% since posting a record high last month. However, the slump in Nvidia’s share price has prompted Morgan Stanley to say the recent drop in the stock has created “another buying opportunity” as concerns about demand sustainability for the company’s chips used in artificial intelligence (AI) computing will soon be quelled by management comments or financial results.

Many analysts have become concerned about Nvidia’s high valuation as the stock has soared more than +188% this year.  Research Affiliates LLC argues that Nvidia is priced so high that it can’t possibly live up to expectations.  Also, Ark Investment Management’s Cathie Wood said Nvidia is too expensive, and there are better opportunities to tap into the exponential growth in AI.  ARK Innovation ETF cut its holding in Nvidia in January and missed out on the stock’s surge this year.