The 10% drop in Nvidia’s share price and the broader stock market drop that is triggering jitters across the world could be the opportunity investors had been hoping for a few weeks ago, according to the chief executive of a leading financial advisory and fintech.
Last week closed with the worst run for US stock markets since October 2022, as investors shunned riskier assets ahead of a slew of Big Tech earnings this week.
Microsoft, Meta Platforms, Google parent Alphabet and Tesla are all on deck to deliver earnings.
“It was a tough week for big tech last week – and, as such, the earnings will come under even greater scrutiny this week,” said Nigel Green, the CEO of deVere Group.
“However, the pull-back in tech, which has been driving markets all year, gives savvy investors the chance to top up their portfolios at lower prices.
“Indeed, this dip will have been what many were hoping for a few weeks ago when stocks were on a tear.”
Nvidia’s stock recovered 4% on Tuesday after its biggest one-day market loss of $212 bln, driven by its AI focus boosting sales and justifying high prices.
Institutional traders continue to have mixed feelings about Nvidia, increasing derivatives trading and buying on dips.
Despite the short-term fluctuations, the long-term trajectory for artificial intelligence remains unequivocally upward – and this is what investors are betting on as they bolster portfolios.
AI-driven technologies are poised to disrupt virtually every industry, from healthcare and finance to transportation and entertainment, explained Green.
“Companies at the forefront of AI innovation are not merely reacting to market trends, but actively shaping the future. Their value lies not only in their current market performance, but in their potential to redefine entire sectors and create new avenues of growth,” he said.
The current short-term dip presents a prime buying opportunity for investors looking to “position themselves strategically for the future.”
Intrinsic value
By adopting a contrarian mindset and recognising the intrinsic value of tech stocks, particularly in AI, investors can capitalise on the disconnect between short-term market sentiment and long-term industry fundamentals, the deVere CEO said.
Furthermore, the prospect of the Federal Reserve delaying rate cuts should not keep investors on the sidelines either.
“The demand for AI-powered solutions is driven by factors such as efficiency gains, cost savings, and competitive advantages, far more than monetary policy.”
In addition to the fundamental strengths of the tech sector, recent geopolitical tensions underscore the critical role of AI in addressing global challenges and enhancing security measures.
“The importance of AI-driven solutions for defence, cybersecurity and conflict resolution becomes increasingly evident. Companies specialising in AI technologies are not only well-positioned to thrive in this environment, but also, hopefully, to contribute to global stability.”
Green concluded that, “while the tech sector sell-off may be rattling some investors, it presents a compelling opportunity for those with a forward-looking perspective.
“Tech earnings and guidance will be scrutinised as never before this week, as the future is redefined and reshaped by technology, particularly AI.”
