TLDR
- Nvidia stock tumbled 6% Tuesday after Meta Platforms reportedly plans to use Google chips in 2027
- The decline pushed shares to their lowest price in nearly three months
- Jim Cramer argues the selloff creates a buying opportunity with $500 billion in confirmed orders
- Google’s tensor processing units pose new competition after powering the Gemini 3 AI model
- Cramer says investor fear is driving the drop, not fundamental business changes at Nvidia
Nvidia stock took a hit Tuesday, falling 6% after fresh reports about Meta Platforms exploring alternatives to its chips. The selloff pushed shares to their lowest level since late August.
The Information reported Meta is evaluating Google’s tensor processing units for its data centers starting in 2027. This marks a potential shift away from Nvidia’s graphics processing units, which currently dominate AI infrastructure.
The timing follows Google’s recent Gemini 3 launch. The advanced AI model was trained using custom chips developed with Broadcom, not Nvidia hardware. This success has renewed interest in alternatives to Nvidia’s GPU technology.
Cramer Calls Selloff Overblown
Jim Cramer pushed back against the negative sentiment surrounding Nvidia. When asked if he would invest fresh capital into the stock, he responded with a clear yes.
“I think Nvidia has been slighted here,” Cramer told CNBC viewers. He emphasized the company’s recent earnings report showing $500 billion in order visibility for Blackwell and Vera Rubin chip platforms.
Cramer also highlighted Nvidia’s current valuation. The stock trades at what he considers an attractive price-to-earnings multiple despite its market leadership position.
The CNBC personality dismissed concerns about customer exodus. “I’m not seeing customers run away from them. I see some customers being price sensitive,” he explained.
Demand Still Outpaces Supply
Cramer argued that customer price sensitivity won’t translate to lower GPU prices. Nvidia’s chips remain the preferred choice for AI workloads across the industry.
“Price goes down when there is no demand,” Cramer said. “The demand is insatiable for Nvidia.”
The broader tech sector has struggled recently. Worries about AI company valuations and substantial data center spending commitments have pressured stocks across the board. Nvidia hasn’t been immune to these sector-wide concerns.
In his evening Mad Money segment, Cramer expanded on his thesis. He said fear rather than fundamentals is fueling the selloff in Nvidia and other AI stocks.
“You either believe in artificial intelligence or you should just stay away,” Cramer stated. He suggested investors lacking conviction should avoid the volatility inherent in AI stocks.
Learning from Past Mistakes
Cramer acknowledged the competition risks are legitimate. Both Alphabet and Meta developing their own chip solutions represents real pressure on Nvidia’s business model.
However, he compared current market dynamics to his premature exit from Alphabet stock. That decision cost him returns when shares later doubled in value.
“If you don’t like Nvidia, you don’t have to own it. Nobody’s putting a gun to your head,” Cramer said. “Don’t let the door hit you on the way out.”
His charitable trust maintains positions in Nvidia, Meta, and Broadcom through the CNBC Investing Club. This portfolio reflects his continued confidence in AI infrastructure investments.
Nvidia closed at $175.60 in extended trading, down another 1.25% after hours. The stock has given back gains as investors reassess the competitive landscape in AI chip manufacturing.
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