What's Next For Nvidia As Stock Enters Correction Zone? Munster Singles Out Crucial Question Market Has About AI Ahead Of Inflation Data

High-flying Nvidia Corp. NVDA has descended from stratospheric levels amidst recent market consolidation. Technically, the stock has experienced a correction following its over-2% decline on Tuesday. Gene Munster from Deepwater Asset Management shared his insights on the stock in a CNBC interview.

Rally Gone Cold? Tuesday’s intraday low of $830.22 marked an 11.22% pullback from a recent high of $935.10 (March 25 intraday high). This signifies the first correction since late October 2023, with the previous pullback being followed by a remarkable rally, as noted by the CNBC anchor.

Source: Benzinga

Commenting on the stock’s movement and his firm’s stance, Munster stated that his firm’s flagship Titan fund is currently not purchasing Nvidia shares. However, he mentioned the firm is monitoring opportunities, anticipating “kind of a pullback, which we believe will happen, going into their print for the quarter.”

Munster observed that two weeks before Nvidia reported its January quarter, the stock traded down approximately 9%, then declined further in after-hours trading following earnings, but has since rebounded by about 57% in the past three months. “So we’ve seen that kind of whipsaw like you talked about,” he said.

The crucial question, according to Munster, is whether the market believes AI will be as transformative as many anticipate. “And if the answer is that you think that this can be bigger than the internet, bigger than the PC, internet PC combined, then it’s highly likely this company continues to grow faster for longer over the next two to five years,” he explained.

See Also: Best Artificial Intelligence Stocks

Nvidia Vs. Ancillary Bets: Reflecting on the rally in energy companies that provide electricity to power data centers, Munster stated, “Energy is going to get a nice bid here.”

However, Munster expressed more confidence in Nvidia, asserting, “If you think about the chips, NVIDIA still has [a] multi-year lead.” The tech entrepreneur also said energy is important, “but there’s the inference phase that we are in right now.”

“We’ll get into the application, then that heavy industry, and ultimately the sovereign states. And so this again, I think this is multiple years and NVIDIA is going to grow faster for longer,” he added.

Price Action: Nvidia ended Tuesday’s session down 2.04% to $853.54, according to Benzinga Pro data. The stock is up over 72% for the year.

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