Nasdaq Correction: Is It Time to Buy Nvidia Stocks?

The Nasdaq Composite (NASDAQ: ^IXIC) has recently entered correction territory, indicating a decline of at least 10% from its all-time highs. At the heart of this downturn is Nvidia (NASDAQ: NVDA), which has seen its shares drop around 20% year to date. Despite Nvidia's impressive recent performance, several factors, including concerns over tariffs and potential recession fears in the U.S., have unsettled investors.

For those with a long-term investment strategy, this price drop may present a valuable opportunity to buy Nvidia stocks at a lower price. Here are three reasons why it’s worth considering Nvidia in this market dip.

Nvidia: The Leader in AI Infrastructure

Nvidia holds an impressive market share of about 90% for graphics processing units (GPUs), making it the top player among chip manufacturers fueling the development of artificial intelligence (AI). Originally designed for video game graphics rendering, Nvidia’s GPUs have become essential for training complex language models and running AI applications due to their fast processing capabilities.

The company has also established a significant competitive advantage with its CUDA (Compute Unified Device Architecture) platform, allowing GPUs to be repurposed for a variety of tasks beyond their original design. Since introducing CUDA in 2006, Nvidia has ensured that developers predominantly use its software, reinforcing its market position.

In contrast, competitor Advanced Micro Devices (NASDAQ: AMD) only launched its ROCm (Radeon Open Compute) platform in 2016, making Nvidia’s early entry a key differentiator. Additionally, Nvidia’s CUDA-X has expanded its software offerings, providing tools tailored for AI and high-performance computing, which further strengthens its dominant position in AI model training.

Growing Demand for AI Data Centers

Despite some competition in the AI space, building advanced AI models predominantly requires substantial computational power. Recent iterations of AI models demand exponentially more GPU resources for training. For instance, Meta Platforms saw its Llama 4 LLM requiring ten times the GPUs used for Llama 3. Companies like Elon Musk-backed xAI originally needed 100,000 GPUs for their Grok 3 model, later increasing that requirement to 200,000 GPUs.

As tech giants invest heavily in AI data centers, the big three cloud computing companies plan to contribute a combined total of $255 billion to this endeavor this year alone. This boom in spending highlights the increasing reliance on AI infrastructure as businesses gather to develop and customize their AI models using cloud services.

Moreover, Meta is set to invest up to $65 billion in capital expenditures aimed at enhancing its AI infrastructure, while a consortium including OpenAI and Softbank has committed to a monumental $500 billion in initiatives to expand AI data centers in the U.S., under the banner of Project Stargate. These investments suggest continued growth in the AI sector for years to come, positioning Nvidia as a primary beneficiary.

Attractive Valuation of Nvidia Stock

Finally, it’s essential to consider that Nvidia's stock is currently attractively priced. The shares trade at a forward price-to-earnings (P/E) ratio of 24 based on 2025 analyst estimates, and its price/earnings-to-growth (PEG) ratio sits below 0.5. PEG ratios below 1 typically indicate that a stock is undervalued, particularly in the growth sector where valuations often surpass 1.

Nvidia represents a different profile compared to software-as-a-service (SaaS) companies, which often possess predictable revenues and thus command higher valuation multiples. However, given the ongoing advancements in AI and increasing investment in infrastructure, Nvidia's current valuation appears favorable. The recent pullback in its stock price could prove to be a prime opportunity for long-term investors to enter the market.

Nasdaq, Nvidia, AI