Nvidia stock experienced a small pullback, dropping 6.7% after hitting an all-time high last week. Despite this decline, the stock is up significantly year-to-date and over the past three years. It is important to note that setbacks are normal in the stock market, and Nvidia’s recent pullback does not indicate a change in the company’s growth prospects.
A comparison between Nvidia and Cisco Systems during the dot-com bubble burst highlights key quantitative differences. While Cisco’s stock rose despite declining margins, Nvidia’s stock has been supported by expanding margins. Additionally, Nvidia’s current stock valuation is well below 1.0, indicating that the market expects a slowdown in near-term earnings growth. However, Nvidia’s potential for growth in AI and self-driving cars suggests that its earnings growth may be underestimated by the market.
It is crucial for long-term investors to recognize that Nvidia’s stock pullback is not driven by fundamentals. The company’s long-term growth prospects in AI technology remain unchanged despite recent fluctuations in the stock price. The strong performance and growth potential in Nvidia’s data center and automotive platforms indicate that the company is well-positioned for future success in the rapidly evolving AI industry.
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https://www.fool.com/investing/2024/06/25/nvda-stock-fall-cisco-dot-com-bubble-burst/