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In the wake of a significant drop in NVIDIA Corp NVDA shares, investors are being advised to consider this as an opportunity rather than a setback.
What Happened: On Tuesday, Nvidia’s stock experienced a sharp decline of up to 6.7%, just a day before the company’s highly anticipated earnings report. This dip could be attributed to profit-taking ahead of the earnings release, according to the host of CNBC’s “Mad Money, Jim Cramer, reported CNBC. Despite this, the drop is seen as a potential entry point for investors who have not yet invested in Nvidia.
Cramer, a prominent figure in the investment community, suggested that this could be an opportune moment for new investors to enter the market. He advised, “I think you buy some if you don’t own any,” and added, “Maybe buy some more tomorrow.”
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Even existing Nvidia shareholders are viewing this downturn positively. Cramer remarked, “How great is it that Nvidia is coming in? … You just don’t want these stocks up, up, up,” emphasizing the need for balance in stock performance.
The upcoming earnings report is expected to be a significant test for investor confidence in Nvidia’s AI technology. Despite the recent drop, the company’s stock has seen a remarkable 47% increase since the beginning of the year, following a more than threefold surge in 2023.
Why It Matters: Nvidia’s stock has been on a rollercoaster ride, experiencing a 68% decline from November 2021 to October 2022, followed by a 529% increase, largely due to the growing demand for AI and gaming.
The chipmaker’s Q4 results, scheduled for Feb. 21, are anticipated to be robust, with buy-side estimates significantly above consensus.
Investors have been closely watching the tech industry’s response to the AI Revolution, with Nvidia’s earnings report expected to set the tone for AI investment in the tech sector. Despite the positive outlook, some analysts have warned of a potential post-earnings pullback, with a Bank of America analyst predicting an 11% implied move in Nvidia’s stock value.
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