TLDR
- Nvidia stock dropped 6% after reports Meta may use Google’s tensor processing units instead of Nvidia chips in 2027
- Jim Cramer views the decline as a buying opportunity, citing Nvidia’s $500 billion order visibility for Blackwell and Vera Rubin chips
- Cramer argues price sensitivity from some customers won’t hurt Nvidia’s GPU demand, which remains “insatiable”
- Nvidia shares hit their lowest price in nearly three months as AI valuations and data center spending concerns pressure tech stocks
- Cramer warns investors need conviction in AI or should avoid the sector entirely, comparing current fears to his early exit from Alphabet
Nvidia shares tumbled 6% in morning trading Tuesday as concerns about competition from Google’s AI chips sparked a fresh wave of selling. The stock fell to its lowest level in nearly three months.
The decline came after The Information reported Meta Platforms is considering using Google’s tensor processing units for its data centers starting in 2027. This follows last week’s release of Gemini 3, which was trained on custom chips co-designed with Broadcom rather than Nvidia’s processors.
The selloff has created what Jim Cramer calls a clear buying opportunity. “I think Nvidia has been slighted here,” he said on CNBC’s Squawk on the Street when asked if he would add fresh money to the stock.
Cramer pointed to concrete fundamentals. Nvidia reported strong earnings last week with visibility extending to $500 billion in orders for its Blackwell and next-generation Vera Rubin chip platforms. The stock also trades at what he considers a low price-to-earnings multiple.
Customer Demand Remains Strong
The CNBC host dismissed concerns about customers abandoning Nvidia. “I’m not seeing customers run away from them. I see some customers being price sensitive,” he said.
Cramer argued this price consciousness won’t push down GPU prices. Nvidia’s graphics processing units remain the gold standard for running AI workloads. “Price goes down when there is no demand,” he explained. “The demand is insatiable for Nvidia.”
The broader tech sector has faced pressure recently as worries about AI company valuations and massive data center spending commitments weigh on investor sentiment. Nvidia’s stock has been caught in this downdraft despite its strong order book.
Fear-Driven Selling
In his Mad Money segment later Tuesday, Cramer doubled down on his view that fear rather than fundamentals is driving the selling. He said too many investors buy stocks only after rallies and dump them at the first sign of trouble.
“You either believe in artificial intelligence or you should just stay away,” Cramer stated. He noted that people who missed huge gains over the past decade are those who couldn’t tolerate weakness in their holdings.
Cramer acknowledged the competition concerns are legitimate. Alphabet’s increased reliance on its own AI chips developed with Broadcom represents real business risk. Reports of Meta potentially following suit add another layer of uncertainty.
But he compared the current situation to his own mistake selling Alphabet too early, before the stock doubled. “If you don’t like Nvidia, you don’t have to own it. Nobody’s putting a gun to your head,” he said. “Don’t let the door hit you on the way out.”
The stock portfolio used by CNBC’s Investing Club holds positions in Nvidia, Meta, and Broadcom. Cramer has long advocated for “owning, not trading” Nvidia stock as part of his Magnificent Seven strategy.
Nvidia shares closed at $175.60 in after-hours trading, down an additional 1.25%. The chipmaker continues to face questions about whether its dominance in AI processors can withstand growing competition from custom chip designs.
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