NVIDIA Corporation (NASDAQ:NVDA), the Magnificent Seven’s AI giant, is down 3.18% at the time of writing. Jim Cramer reveals what’s going on:
Some investors say there is growing skepticism that things at Nvidia have peaked. According to Kramer, there is nothing wrong with it. After all, just looking at the numbers, it was great. The widespread skepticism surrounding slower growth, increased competition and concerns that investors will probably get less bang for their buck is misleading. Given that Nvidia doesn’t have enough manufacturing capacity to meet demand, it doesn’t have competition from companies like Amazon, which manufacture some chips to meet specific needs.
That said, NVIDIA Corporation (NASDAQ:NVDA) has the best technology so far and would “welcome competition.” The fact that Amazon manufactures some of its own chips and continues to be a “satisfied” customer of Nvidia probably supports Nvidia’s position as the go-to provider for premium, high-performance GPU and AI chips. It will strengthen its position and allow the company to focus on its core strengths.
At the same time, many people don’t know that Nvidia also has software, Cramer says. AI’s darling chip maker has announced a breakthrough generative AI model named Fugatto. Fugatto is designed as a versatile tool for creating and modifying sounds using text and audio prompts. Jim Cramer says this is an AI idea factory project, and that CEOs occasionally come up with ideas like this to “get everyone thinking.”
Jensen’s strategy with Fugatto seems designed to showcase innovation that is reminiscent of what great companies were doing in the past, and to inspire big-picture thinking about NVIDIA’s future. These costly initiatives are rare today, but giants like Nvidia continue to deliver value.
This is why Jim Cramer says:
“Don’t begrudge Mega Cap, just buy it.”
Our Research Director shared his thoughts on NVDA’s earnings results here. He believes NVDA stock could reach $170 within three months. While we acknowledge NVDA’s potential as an investment, we believe some AI stocks are more likely to deliver higher returns and do so in a shorter time frame. If you’re looking for AI stocks with more promise than NVDA, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: BlackRock’s 8 Best Widemot Stocks to Buy Now and 30 Most Important AI Stocks.
Disclosure: None. This article was originally published on Insider Monkey.
