According to CNBC, Jim Cramer argued Tuesday that the recent Nvidia selloff is driven by fear rather than fundamentals. The stock had declined into the mid-$180s following concerns that Alphabet is relying more on its own AI chips developed with Broadcom instead of Nvidia’s processors. Additional pressure came from reports that Meta might also purchase Google-designed chips. Cramer said this reaction exemplifies investors treating markets as a zero-sum fear game rather than maintaining conviction in companies they own. He pointed to his long-running support for the Magnificent Seven companies including Nvidia, Alphabet, Amazon, Apple, Meta, Microsoft, and Tesla, noting they earned trillion-dollar valuations through consistent execution and adaptability.
Cramer’s conviction argument
Here’s the thing about Cramer’s perspective: he’s basically saying you either believe in the AI thesis or you don’t. And if you don’t have that conviction, there’s a whole world of safer, slower-growth stocks to choose from. His philosophy is that the investors who missed out on huge gains over the past decade were the ones who couldn’t tolerate weakness or trust the companies they owned. Remember when he exited Alphabet before the stock doubled? He’s using that as a cautionary tale for anyone considering bailing on Nvidia now.
Nvidia’s moment of doubt
So what’s actually happening with Nvidia? The stock got hit hard despite a strong earnings report, which is always concerning. The narrative shifted to competitive threats – specifically that big customers like Google and Meta might develop or purchase their own AI chips rather than relying entirely on Nvidia. But here’s the question: does this really change Nvidia’s dominant position in the AI infrastructure market? Probably not as much as the market reaction suggests. These are the same kind of doubts that hit Tesla when EV competition intensified, before the narrative shifted to self-driving and robotics.
The bigger picture
Look, volatility in high-growth technology stocks isn’t new. What’s interesting here is how quickly sentiment can shift even for companies with enormous profits and proven execution. Cramer’s point about the Magnificent Seven adapting under pressure is worth considering – these companies have consistently navigated competitive threats before. The current AI infrastructure build-out remains massive, and Nvidia’s hardware is at the center of it. Whether you’re monitoring industrial automation systems or training large language models, the computing demands aren’t disappearing.
Investment philosophy lesson
Cramer’s “don’t let the door hit you on the way out” comment might sound harsh, but it captures an important truth about growth investing. If you’re constantly reacting to every negative headline or competitive threat, you’ll likely underperform. The companies driving technological transformation – whether in consumer AI or industrial computing – face constant challenges. The question isn’t whether challenges exist, but whether the company’s competitive advantages and growth trajectory remain intact. For Nvidia specifically, the recent selloff seems more about narrative shifts than fundamental deterioration in their AI leadership position.
