Is Now the Time to Buy the Dip on Nvidia Amid Nasdaq Correction?

The Nasdaq Composite (NASDAQINDEX: ^IXIC) has recently slipped into correction territory, marking a decline of at least 10% from its all-time highs. A significant factor contributing to this downturn has been the performance of Nvidia (NASDAQ: NVDA), whose stock has dropped roughly 20% year to date. The semiconductor giant has posted impressive results, yet worries about tariffs and the potential for a U.S. recession have unsettled investors.

For those who view Nvidia as a long-term investment, this recent dip in its stock price may present a prime opportunity to buy shares at a favorable price. Here are three compelling reasons why Nvidia remains an attractive investment, even during this correction.

1. Nvidia Leads in Artificial Intelligence Infrastructure

Nvidia commands approximately 90% of the market share for graphics processing units (GPUs), establishing itself as the predominant player in the development of artificial intelligence (AI) infrastructure. Originally designed to enhance graphics rendering in video games, Nvidia's GPUs are now essential for training large language models (LLMs) and executing AI inference.

The introduction of the CUDA (Compute Unified Device Architecture) platform in 2006 allowed Nvidia to set itself apart by enabling GPUs to be programmed for a broader range of tasks. This innovation has resulted in a significant competitive advantage, as many developers have become accustomed to utilizing Nvidia’s software platform.

In comparison, rival Advanced Micro Devices (AMD) only launched its ROCm (Radeon Open Compute) platform a decade later, in 2016. Through CUDA-X, which builds upon CUDA, Nvidia has also developed a comprehensive software ecosystem that includes libraries and tools tailored to accelerate AI and high-performance computing applications.

Due to this established software foundation, Nvidia remains the leading choice for AI model training. A recent study by semiconductor research firm Semianalysis highlighted that AMD's latest GPUs are not suitable for AI training without significant modifications, further cementing Nvidia's position at the forefront of AI infrastructure growth.

2. Growing Demand for AI Data Center Infrastructure

The expansion of AI model capabilities requires increasingly powerful computing resources. For instance, Meta Platforms has indicated that its Llama 4 LLM necessitates ten times the GPUs needed for its predecessor, Llama 3. Meanwhile, xAI—backed by Elon Musk—initially used 100,000 GPUs to develop its Grok 3 model before tripling that to 200,000 GPUs.

Cloud computing companies are investing heavily in AI data centers to meet soaring demand. The top three cloud service providers are projected to collectively spend $255 billion this year on AI data center developments.

With many businesses leveraging cloud platforms to create custom AI models, investments in AI infrastructure are likely to continue growing. Additionally, Meta is expected to allocate up to $65 billion this year for capital expenditures primarily aimed at expanding its AI capabilities. Meanwhile, a consortium led by OpenAI and Softbank is committed to investing $500 billion over the coming years to build AI data centers as part of Project Stargate.

This trend indicates a notable demand for AI infrastructure investment in the future, positioning Nvidia for continued growth.

3. Nvidia’s Stock is Currently Underpriced

Another key reason to consider owning Nvidia shares is that the stock appears to be attractively valued. It currently trades at a forward price-to-earnings (P/E) ratio of 24 based on analysts' projections for 2025 and at a price/earnings-to-growth (PEG) ratio below 0.5. Typically, a PEG ratio under 1 suggests that a stock is undervalued, and it is common for growth companies to have PEG ratios significantly greater than 1.

Although Nvidia is not a software-as-a-service (SaaS) company with predictable, recurring revenues, its valuation still seems reasonable given the early stages of AI adoption and increasing spending on AI infrastructure. Thus, the recent decline in Nvidia's stock presents a promising buying opportunity for investors looking toward the long term.

Nasdaq, Nvidia, Stocks