In fact, Nvidia remains the key supplier of the AI infrastructure buildout. “Everything still revolves around Nvidia,” he said. Nevertheless, the stock is now only modestly higher for the year and is trading at its lowest valuation of the year, at just under 19 times forward earnings. To Cramer, that suggests that the selloff may have gone too far.
Part of the bearish argument is that Nvidia’s largest customers are trying to reduce their dependence on the company. Many hyperscalers and AI companies have complained about the high cost of Nvidia chips while also developing their own custom AI processors. Most recently, Reuters reported that China’s DeepSeek is working on its own AI chip. However, Cramer’s point is that these companies still rely heavily on Nvidia today, even if they are trying to build alternatives over time.
Selling Not Purely About Nvidia’s Fundamentals
Cramer also suggested that some of the selling may not be purely about Nvidia’s fundamentals. Instead, he said that Nvidia may have become a “source of funds,” which means that investors are selling it to raise cash for other technology trades, such as SpaceX (SPCX) ahead of its Nasdaq 100 (QQQ) inclusion. Even with those pressures, Cramer said he has not seen evidence that Nvidia is losing its leadership position.
