Amid a 14% drop, Nvidia just gave investors a rude awakening. What should investors do?

Financial markets got off to a flying start in 2024. However, the S&P 500 And Nasdaq Composite Index have given back some of their gains over the past month as the stock has seen pronounced selling activity. At the time of writing, shares of artificial intelligence (IA) darling Nvidia (NASDAQ: NVDA) have fallen nearly 14% over the past month.

While some of the decline can be attributed to the broader market selloff, Nvidia has recently disappointed investors with some disappointing news. Should investors be bothered by this dilemma, or is this a rare opportunity to buy the hottest AI stock on the dip?

What’s going on with Nvidia stock?

There are many factors influencing the recent price performance of Nvidia shares.

For starters, the unemployment rate unexpectedly rose to 4.3% in July, its highest level in more than two years. In addition, recent comments from the Federal Reserve continue to make economists doubt the possibility of an interest rate cut.

All things considered, the murky macroeconomic backdrop, coupled with some election-style volatility, has surely prompted some investors to start selling stocks and hoarding cash amid uncertainty. Unfortunately, that’s only part of the equation for Nvidia investors. Perhaps most concerning is that Nvidia’s highly anticipated Blackwell graphics processing unit (GPU) is facing delays due to design flaws, according to multiple media reports.

As companies of all sizes and industries ramp up their efforts to invest in generative AI, Nvidia’s delay in the Blackwell case doesn’t exactly inspire confidence. Still, I don’t think it’s necessarily a reason for investors to panic just yet.

Why Blackwell’s Delay Isn’t a Big Deal

Although estimates vary, public research suggests that Nvidia holds at least 80% of the AI ​​chip market. So while the delay in Blackwell’s launch may be a negative, it is extremely unlikely that Nvidia will lose significant market share because of this design flaw.

Paul Meeks, chief investment officer of Harvest Portfolio Management, recently expressed a similar sentiment in an interview on CNBC. He rightly points out that demand for Nvidia’s GPUs is so strong that the company will have no problem selling the Blackwell chips once they actually hit the market, regardless of the delay.

Additionally, each of the “Magnificent Seven” companies has reported earnings this season, with the exception of Nvidia. One common thread among the mega-caps is that spending on AI-powered products and services has steadily increased over the past year. In particular, capital expenditures…