Are Nvidia shares oversold in September 2024?

Nvidia shares crashed last week despite yet another terrific set of results. Is this a golden buying opportunity for the chipmaker?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: NVIDIA

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Buy the rumour, sell the news. That old investing saying rang true once again with Nvidia (NASDAQ: NVDA) shares as the share price climbed a quite ridiculous 30% in the month of August ahead of second-quarter earnings only to crash 8% in a day after those earnings were released. 

That Nvidia smashed expectations once again mattered little for the share price. It seemed a lot of people were quite content to sell on the news. 

Created with Highcharts 11.4.3Nvidia PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Time to buy?

Those looking on from the sidelines might wonder whether such a drop, especially in light of more good results from the chipmaker, is a tempting entry point into what has been a very lucrative stock – and even that might be underselling it. 

Should you invest £1,000 in Legal & General right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General made the list?

See the 6 stocks

Nvidia has a compelling claim to being the best stock of the 2020s. Since 1 January 2020, the share price is up 20 times in value. I can’t think of many other big caps with that kind of growth. So if this winner keeps on winning, maybe now is the time to consider buying. 

The future of Nvidia hinges, of course, on artificial intelligence. It feels like we’re in a bit of an AI phoney war at the moment, where the technology is obviously there and impressive, but not a whole lot has happened yet. 

The future

I see cute chatbots that sound like a real person and deliver decent summaries of information, and I think the tech seems very good. But where is the unparalleled economic growth? Where are the revolutionary new companies? Which industries have been upturned by this technological leap forward? Not too many, as of yet.

So we’re really looking at the future and a lot of companies are betting big that AI will have a serious effect. 

An interesting note from Nvidia’s update was over half of revenues were drawn from just four customers, the so-called “mystery whales”. These aquatically denominated firms are believed to be among a group of Amazon, Meta, Microsoft, Alphabet, OpenAI, or Tesla

And given the gargantuan dollar sums involved, it’s hard to believe there could be many other contenders. If one or more of these tech giants and all the human capital they employ somehow crack the code of AI then Nvidia could look cheap even at its current price. 

Valuation

As for the valuation, how is it currently looking? Well, after an 8% haircut and a new round of projections, we’re looking at a forward price-to-earnings ratio of 43. Oof. Would I invest in your average company with 43 years to earn (in profits) my original stake back? No, of course not. 

That’s not to say Nvidia won’t turn out to be a good investment or grow profits further, but AI will need to make good on some very grand promises for that to happen. I’ll be waiting for a cheaper price, I think.

Should you buy Legal & General now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Fieldsend has positions in Tesla. The Motley Fool UK has recommended Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »