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Jensen Huang is out and Nvidia stock is down—what market pros say about buying dips
Investors are being urged to revisit why they own or are considering Nvidia after reports that chief executive Jensen Huang is leaving and the share price has fallen. Market strategists say a dip can be an opportunity for a broad, diversified portfolio, but an individual company’s decline calls for a fresh look at its prospects and the investor’s reasons for holding it.
Investors should also consider whether a single stock has become too large a part of their portfolio and whether any short-term setback could harm its longer-term profitability. One strategist points to historical data suggesting founder-led companies outperformed peers from 1990 to 2014, while Nvidia’s growth forecasts and role as a leading AI-chip supplier remain part of the investment case. The company is due to report third-quarter fiscal-year results on 17 November, and one strategist says AI demand has not changed.
In short
- Reassess Nvidia’s prospects before buying the dip.
- Consider whether one stock makes up too much of your portfolio.
- Nvidia’s results are due on 17 November.
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The case for
The fall may offer a chance to buy or hold Nvidia at a lower price if an investor still believes its growth prospects justify the risk. Nvidia remains a leading AI-chip supplier, forecasts point to continued growth, and one strategist says demand for AI has not changed; historical data also suggests founder-led companies have often performed well.
The case against
A steep fall is a reason to reassess whether Nvidia’s prospects still support its valuation, rather than assuming every dip is a bargain. Investors may be too concentrated in one company, and any setback that weakens its longer-term profitability could undermine the case for holding it; the upcoming results may provide useful evidence.
Explained simply
Nvidia designs chips that process information for computers and data centres, including systems used to develop and run artificial intelligence. It has become a major supplier to companies investing in AI, and its chief executive, Jensen Huang, is also a co-founder.
A company’s share price can fall for many reasons, but a lower price alone does not show whether it is a better investment. Investors often weigh the company’s expected growth and profits against risks, and consider how much of their savings they have tied to one share.
Huang’s role may matter to investors because some research has found that founder-led companies performed differently from other firms over certain periods. Nvidia’s business outlook and continued demand for AI chips are also relevant to how investors assess its longer-term prospects.