Nvidia may face short-term hiccups: Strategist

Shares of Nvidia (NVDA) are trading higher on Tuesday following a major sell-off in the tech sector on Monday. The chip giant has seen its shares beaten up as investors look to swap out of the "Magnificent Seven" stocks and broaden their holdings.

Moor Insights & Strategy founder, CEO, and chief analyst Patrick Moorhead joins Morning Brief to give insight into the tech sector, Nvidia's recent sell-off, and how the stock may fare going forward.

On Nvidia's recent volatility, Moorhead comments: "This stock was so hot for so long that any type of hiccup or bad news could mean a selloff. And you add to what happened over in Japan and some other risks that that melted the entire market, but you have to stand back and look at the overall short-, mid-term and long and then align whatever investment strategy you have, with those opportunities and risks, I don't see anything changing in the data center for Nvidia, for the next 12, maybe even 18 months."

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Nicholas Jacobino

Video transcript

We're tracking in video shares this morning, NVD A the ticker symbol up on your screen right there.

The shares are moving to the upside today after leading the declines in the magnificent seven yesterday, Monday, with those stocks shedding over $650 billion amid a steep global sell off the stocks volatile run over the last month.

Here is leaving investors wondering if now is the time to buy.

Let's bring in Patrick Moorhead, the founder and CEO of more insights and strategy joining us now here.

All right.

So Patrick, I mean, is now the time to if you're not already involved in some form or another in and have exposure to NVIDIA is now the time.

Listen, giant selloffs are always a huge opportunities for investors.

And when I stand back and when I look at the pe ratio, it's reasonable when you consider uh the growth rates, uh their midterm competitive uh position hasn't changed uh from, from anything.

And uh when I look at short term, there is a little bit of uh risk here uh with this potential uh Blackwell uh push, which is uh the follow on to their, their, their series, but customers can still continue to buy the series.

So even on the, the short term risk, I don't see a tremendous amount uh of, of downside here.

So Patrick, I'm curious on what you attribute just the volatility to it.

It sounds like it's a bit of an overreaction.

It sounds like you think that any sort of hiccup here, if we do see that in production is gonna be more of a short term blip.

Was this just a stock just given the massive run up that we've seen, which is primed and positioned here for this type of pull back and then therefore can go into your thesis of what you just said, it maybe does present a buying opportunity then for investors.

Yeah, you nailed and I think I on one of your previous shows, I even used the word hiccup.

I mean investors that this stock was so hot uh for so long that any type of hiccup or, or bad news uh could mean a sell off and you know, you, you add to what happened uh over in Japan and some other risks that, that, you know, melted the entire market.

Um But, but you have to stand, you have to stand back and look at, you know, the overall short midterm and long and then align, you know, whatever investment strategy you have uh with those opportunities and risks.

I don't see anything changing in the data center for NVIDIA.

Uh for the next 12, maybe even uh 18 months.

Uh There is a little bit of short term volatility until we understand what exactly is happening uh with Blackwell, uh which by the way, could be an opportunity for uh a MD short term broadcom and maybe even uh Marvel to go in and, and grab some share.

But that's, that's a short term, uh not a midterm uh and then long term, right?

It, it, it's a a totally different conversation.

It, it seems like some of the the market's focus is gonna shift towards China's economic data that's coming out this week.

And the reason why I bring this up is this is gonna be uh uh pretense perhaps for the NVIDIA earnings once they finally do report given the significance of that region and continuing to tap in to being able to put a specific chip for China made for that region into Asia Pacific as well here.

What do you expect the the reality of the pulse as prescribed via NVIDIA to be about China and that market?

Well, it's kind of good news, bad news, you know, the bad news was that earlier, there were big restrictions and currently restrictions on companies uh like NVIDIA, E MD and Intel.

And um when um you step back because they're not participating, irrespective of what's going on with the China economy, it doesn't impact NVIDIA a lot.

I think the the biggest thing that could impact NVIDIA in regards to China is for the government to lock down on hyper scalar access which has NVIDIA GP US in it to China.

Currently, Chinese companies uh uh can utilize uh US and Europe based hyper scalar infrastructure as a service partners that, that have GP U SI do think it would be an upside if NVIDIA were to get government approval on this new tuned down version of their latest chips.

So I think regardless of what comes out economically on China, uh if NVIDIA gets the green light, it's good news.