Key Takeaways:
Nvidia shares gained 5.1 percent since June 8, when CEO Jensen Huang urged buying AI stocks at a discount, beating the S&P 500's 4.3 percent rise.
"We're at the beginning of it, and whatever happened to the stock market, you should be very happy because now you can buy at a discount," Huang said in Seoul, where he finalized a partnership with South Korean memory chipmaker SK Hynix to design next-generation AI memory chips.
A four-stock basket of Nvidia, Alphabet, Amazon, and Microsoft returned 8.5 percent since June 8, about double the S&P 500's gain. Microsoft rose 18.5 percent and Amazon 11.1 percent on the strength of recent earnings, while Alphabet slipped 0.5 percent.
Huang's comments came after AI shares slid from a record run-up, with Nvidia falling 15 percent from its May 14 peak above $235 a share, a $5.7 trillion market cap. The CEO's longer-term view suggests the recent spending on AI is just the beginning, with gains expected over years rather than months.
The sell-off that set up Huang's advice began May 14, when Nvidia stock surpassed $235 a share, giving the company a $5.7 trillion market cap. Investors then began to worry that the AI boom had run ahead of reality. Over the following weeks, Nvidia dropped 15 percent, while AI hyperscalers Alphabet and Amazon each plunged 11 percent.
Huang delivered his comments between business meetings in Seoul, where he finalized a partnership with SK Hynix to design next-generation AI memory chips. His framing of the sell-off as an entry point rather than a warning sign drew attention because it came from the CEO of the company at the center of the AI trade.
Investors who interpreted Huang's comments broadly and bought a basket of AI stocks have fared better than those who bought Nvidia alone. Microsoft rose 18.5 percent since June 8, largely on the strength of its recent earnings report, while Amazon gained 11.1 percent. Alphabet lagged, down 0.5 percent. The four-stock basket returned 8.5 percent, about double the S&P 500's 4.3 percent gain during the same period.
Nvidia's current price of $223.96 gives the company a $5.4 trillion market cap, still below its May peak but recovering from the sell-off. The stock's 52-week range spans $164.07 to $236.54, with a gross margin of 74.15 percent.
Huang's comments were not aimed at a two-month trade. He has repeatedly framed the recent, massive spending on AI as the tip of the iceberg, predicting solid long-term gains for AI companies over years rather than months. For investors who believe that thesis, selling AI stocks now while they beat the market may be premature.
The next test for the AI trade comes with upcoming earnings reports from the major hyperscalers, which will show whether the capital spending that has driven Nvidia's growth continues at the same pace. If the spending holds, Huang's discount call could look even better in 2027.
This article is for informational purposes only and does not constitute investment advice.
