Our Strategy for Nvidia’s Selloff

*We want to own Nvidia shares as the AI ramp continues in 2H 2024

*Technicals show a gap in NVDA shares near $95, but Micron’s earnings are a likely catalyst for those shares and others in the portfolio

* Micron’s outlook for AI, data center, PCs and smartphone will set the tone for the June quarter earnings season and 2H 2024

Coming off the Nasdaq Composite’s worst day in the last few months, the market looks to recover some of that move lower. Some of that lift is due to the pre-market rebound in Nvidia NVDA shares following their double-digit slide in recent days. The arguable silver lining for NVDA’s move lower is that it pulled both the Nasdaq Composite out of overbought territory and did the same for the S&P 500, but to a more modest degree.

But the question many are asking is: "Should we buy the dip in NVDA shares?"

Following the string of price target increases following the 10-for-1 stock split, it is tempting, but we have to consider that even after the recent slump, NVDA shares are still up significantly this year. That, of course makes our decision to start and bulk up the portfolio’s position earlier this year a smart one. While we have a relatively full position in NVDA shares, we understand that some newcomers to the portfolio might be interested in where to pick up shares.

As painful as it might be to hear, we do see a gap in the NVDA chart near $95, and while it's not always the case, gaps tend to get filled. If we saw that happen, it would be a place to add shares. However, tomorrow brings quarterly results from Micron MU, and its comments about AI and data center could reignite NVDA shares. Micron’s results are also likely to signal what we’ll hear about those markets in the coming weeks when Alphabet GOOGL, Meta META, Amazon AMZN and Microsoft MSFT report and update their capital spending plans.

Micron’s comments and outlook for the smartphone and PC markets will be one we’re watching as well given our positions in Apple AAPL, Qualcomm QCOM and Universal Display OLED. In particular, QCOM shares have traded off of late likely due to some reports that new AI PCs had some issues running certain programs. Our thinking is that will be resolved, especially with corporations leaning into AI to drive productivity. This morning, ConAgra CAG announced it is working with Microsoft, using AI to “enhance its IT, supply chain, R&D, demand science, brand and design operations.”

This won’t be the last announcement like this but, still, we’ll check our thinking against Micron’s outlook. We continue to see the AI on device ramp driving congestion in digital networks, leading to a rebound in spending for Marvell's MRVL networking and infrastructure segments.

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At the time of publication, TheStreet Pro Portfolio was long AAPL, NVDA, GOOGL, MRVL, MSFT, AMZN, QCOM and OLED.