Nvidia tumbles ahead of earnings report, providing an opening for new investors

By News Room Last updated Feb 20, 2024

Nvidia shares were down sharply, one day before the leading artificial intelligence chipmaker’s pivotal earnings report Wednesday evening. Tuesday’s stock decline presents a great entry point for investors who don’t own Nvidia, according to Jim Cramer. Nvidia’s drop of as much as 6.7% at session lows was likely driven by profit-takers ahead of the company’s quarterly release. Some Wall Street pros say the closely watched results represent a test for broader investor optimism about generative AI. Nvidia entered the holiday-shortened trading week up a blistering 47% year to date, after more than tripling in value in 2023. Investors who have been waiting for an opportunity to own Nvidia are getting one Tuesday, Jim said. “I think you buy some if you don’t own any,” he said, noting the importance, as always, of starting a new position with a small initial purchase. “Maybe buy some more tomorrow,” he added. Even for investors who have long owned the stock, Nvidia’s decline Tuesday was welcome news. “How great is it that Nvidia is coming in? … You just don’t want these stocks up, up, up,” Jim said, reflecting the nuance that’s needed despite bestowing Nvidia the rare “own it, don’t trade it” designation. It is possible to both believe a company’s long-term future is bright, as we do with Nvidia, and wish for its stock to not overheat. NVDA 5Y mountain Nvidia 5 years Wall Street has set a high bar for Nvidia’s Wednesday night report, which will include both fiscal 2024 fourth-quarter results and guidance for its fiscal 2025 first quarter. Recent earnings from key customers — namely tech giants such as Microsoft and Meta Platforms and partners like server maker Super Micro —suggest demand for Nvidia’s AI chips remains fervent. Still, the magnitude of Nvidia’s outperformance, even with Tuesday’s decline, means its stock is vulnerable to a sell-off after the report. That is especially true if Nvidia’s results and guidance don’t surpass expectations at all. But it’s also possible that a solid report could be met with additional profit-taking. Once Wednesday’s earnings report is in the rearview mirror, the next catalyst for Nvidia is the company’s four-day annual developer conference, known as GTC, set to begin March 18. (Jim Cramer’s Charitable Trust is long NVDA, MSFT, META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Nvidia headquarters in Santa Clara, California, June 5, 2023.

Marlena Sloss | Bloomberg | Getty Images

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