The Nasdaq index is now in correction territory, meaning it is now more than 10% down from its all-time high. While this may seem like a big deal, 10% corrections tend to occur just about every year, so this is something that investors must understand happens quite frequently.
Because this happens regularly, investors shouldn't panic; instead, it's time to start looking for bargains that could be even more heavily hit than the broader market. My biggest value to buy right now is Nvidia (NVDA +1.31%), one of the best artificial intelligence (AI) stocks out there. At this writing, it's down nearly 30% from its all-time high and looks like a dirt-cheap bargain.
Nvidia's stock is going through the biggest drawdown during its multiyear run
Nvidia makes graphics processing units (GPUs), which are used for arduous computing tasks. Because they can process multiple calculations in parallel, they are well suited for tasks like AI training. While there are other competitors in the GPU space, Nvidia's options are superior in multiple ways, and it has become the clear pick in this space.
With companies investing billions in their AI infrastructure, Nvidia has become the primary beneficiary of this spending, which has caused its stock to rocket higher over the past few years. At its peak, Nvidia's stock was up 922% since the start of 2023. That's an incredible run, and it's one of the main reasons why the stock is being sold off so aggressively. Investors want to take profits before they disappear, so this sell-off disproportionately affects Nvidia. However, plenty of tailwinds are pushing Nvidia higher, and investors need to take advantage of the biggest sell-off the stock has seen since its run began in 2023.
Nvidia will be all right even if the market has its doubts
2025 is slated to be a record year of capital expenditures from many of the big tech companies. The vast majority of this expense is going toward building out AI computing capacity, which will benefit Nvidia. Furthermore, Nvidia's latest chip architecture, Blackwell, is starting to become more widely available, which means some clients may be upgrading their existing GPUs with more advanced versions.
These are all positive effects for Nvidia's stock, and they add to Wall Street's projection that Nvidia's revenue will rise 56% to $204 billion this year. However, the big caveat here is that it will require big tech companies to continue spending a lot of money to reach that projection. The fear is that economic weakness brought on by trade wars could cause these AI hyperscalers to cut their spending, which would harm Nvidia.
NASDAQ: NVDA
Key Data Points
However, I don't see that playing out, as each company competes to establish AI supremacy. If they see a competitor get worried about economic conditions and cut spending, it may encourage them to continue their spending levels to gain ground. Many of these companies have massive cash flows and huge cash piles, so it is also not a big deal to continue spending like this.
While it may concern some investors in the short term, it's in every company's best interest to continue investing in AI resources over the long term, which will benefit Nvidia.
As a result, I think Nvidia's stock is still a buy here, especially given its current price tag.
The stock looks like a great deal right now
During Nvidia's run, the stock has seldom been considered cheap. However, I think we've reached that point, as it now trades for 36 times trailing earnings and 24 times forward earnings.
NVDA PE Ratio data by YCharts
That's the cheapest Nvidia has been in some time, and I think investors need to take advantage of it while it is fairly cheap. I'm not sure when this sell-off will end, but I know that Nvidia will emerge relatively unscathed on the other side (at least from a business perspective) due to the massive AI investments that are occurring.
I think Nvidia is a fantastic stock to buy here, but I wouldn't be surprised if the market continues to decline until some positive headlines pull it out of the decline.
