The recent surge in artificial intelligence trading has impacted the chipmaker NVIDIA and caught the attention of Steve Eisman from Neuberger Berman Group. Eisman, known for his past short bets, sees NVIDIA as a long-term investment despite recent fluctuations. The stock saw a three-day decline followed by a 4.1% gain, leading Eisman to believe it wasn’t a significant correction.
NVIDIA has experienced significant growth this year, with a 139% increase in stock value. Eisman dismisses concerns about the company growing too quickly, stating that valuation is not the primary concern for him as long as the company’s story remains intact. Saira Malik of Nuveen Asset Management also shares this sentiment, highlighting NVIDIA as a key player in the AI market.
Malik emphasized that NVIDIA’s dominance in AI and strong growth rate justify its stock price, which may seem high to some but is still considered reasonable compared to its peers. Additionally, the company’s trailing 12-month price-earnings ratio has become more reasonable, making it comparable to other companies like Advanced Micro Devices.
The rally in AI-powered companies like NVIDIA and Microsoft has contributed to the success of US stock benchmarks, with Malik pointing out that these companies have been investing in this trend for years, unlike new companies in the dotcom bubble era. This long-term focus sets them apart and indicates a different outcome this time around.
Overall, despite recent fluctuations in NVIDIA’s stock price, experts like Eisman and Malik remain confident in the company’s long-term prospects and its position in the AI market. The recent sell-off in AI trading has not deterred their optimism, and they continue to see value in holding onto NVIDIA stock.
Article Source
https://fortune.com/2024/06/25/portfolio-manager-big-short-nvidia-steve-eisman/