Broader market trends haven’t been kind to most AI stocks, and Nvidia (NASDAQ:NVDA) fell over 28% from its peak as its slowing momentum coincided with AI fears. However, the stock has finally started to recover today. Shares have gapped up 4.7% despite Trump doubling down on tariffs.
The question on every investor’s mind right now is whether this is a golden opportunity to buy the dip or just another fleeting dead cat bounce in a bear market.
Trump has doubled down on his tariffs policy on Canada and apparently plans to double tariffs on aluminum and steel to 50%. On the flip side, U.S. Commerce Secretary Howard Lutnick had a conversation with Ontario Premier Doug Ford, which resulted in the province suspending its plans of charging a 25% surtax on U.S.-bound electricity. This sent stocks higher, and NVDA stock was a key beneficiary.
Moreover, stocks may have been oversold for the time being, and you’ll always find a few green days, no matter how bearish the sentiment is. This brings us to the big question: is the NVDA recovery a dead cat bounce?
There are legitimate concerns that Nvidia’s recent uptick might be nothing more than a dead cat bounce. Trump’s tariffs on Canadian, Mexican, and Chinese imports are creating uncertainty across markets, particularly for companies like Nvidia that generate 56% of their revenue overseas.
Nvidia’s upcoming GPU Technology Conference on March 17 could be a catalyst for renewed investor interest. CEO Jensen Huang is expected to unveil next-generation products like the Blackwell Ultra and Rubin chips. But again, this could send shares lower if investors aren’t impressed.
For the short term, I believe NVDA’s recovery is a dead cat bounce. The broader market environment remains volatile, and geopolitical risks could push NVDA lower before it stabilizes.
In the long run, NVDA is not a bad buy-the-dip opportunity if you like the AI narrative. NVDA stock is surprisingly cheap compared to most other AI stocks, and if the AI rally returns, expect juicy returns here.
Nvidia's current forward earnings multiple sits at around 23.8 times, which has historically been near the floor.
Plus, Nvidia’s fundamentals remain rock-solid. Last quarter's adjusted earnings surged 71% year-over-year to $0.89 per share. Data Center segment revenue grew 93% to $35.6 billion, and Automotive and Robotics revenues jumped 103%. if you're thinking long-term, this dip feels more like an opportunity than a trap.
The market usually takes things too far in either direction, so while NVDA is “cheap” compared to its historical prices, it can get even cheaper if the market remains fearful.
The consensus price target of $171.7 implies 55.3% upside. Even the lowest price target of $102.5 implies very little downside from NVDA’s current price.
