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A $430 billion\u00a0sell-off<\/a>\u00a0over the past three trading days in artificial intelligence darling Nvidia<\/a> is no more than a blip to Neuberger Berman Group\u2019s Steve Eisman.<\/p>\n The senior portfolio manager, best known for his\u00a0short bet against subprime mortgages<\/a>\u00a0ahead of the global financial crisis (and portrayed in The Big Short\u00a0<\/em>by Steve Carell), owns \u201ca lot\u201d of the chipmaker\u2019s shares and considers it a long-term play that\u2019s going to be relevant for years to come, he said Tuesday in an an interview on\u00a0Bloomberg Television.<\/p>\n The stock gained as much as 4.1% on Tuesday, after a three-day slide that pushed shares down more than 10% for the first time since April, past the threshold that represents a correction<\/a>.<\/p>\n \u201cIf you look at the chart on Nvidia, you can barely see the correction,\u201d Eisman said. \u201cI don\u2019t think it means anything.\u201d<\/p>\n The AI poster-child has soared this year amid a furious appetite for its chips that dominate the market for artificial intelligence computing. Its\u00a0latest climb<\/a>\u00a0saw shares surge 43% from its May 22 earnings report and stock-split announcement to the June 18 peak, when it toppled Microsoft<\/a> to become the world\u2019s most valuable company<\/a>\u2014a title it has since lost.<\/p>\n Nvidia is still up 139% this year through Monday\u2019s close. As some skeptics worry that the company has grown too quickly, Eisman says price is the last thing to fret over.<\/p>\n \u201cOne of the things I learned running a hedge fund is that shorting a stock solely because of valuation is a death wish,\u201d he said, adding that people purchase a stock even when it\u2019s perceived to be expensive because they\u2019re buying into a story. \u201cAs long as the story is intact\u2014like Nvidia is obviously intact\u2014the story is going to continue. I don\u2019t think all that much about the valuation of Nvidia.\u201d<\/p>\n The message that Nvidia will continue to benefit from booming AI demand was echoed by Nuveen Asset Management LLC\u2019s chief investment officer.<\/p>\n \u201cNvidia is the company that wins in this space, basically no matter what,\u201d Saira Malik said in an interview. \u201cEveryone who wants to shift into AI basically has to use Nvidia\u2019s products. Their growth rate has been so strong that their price-to-earnings really isn\u2019t expensive.\u201d<\/p>\n Malik is a portfolio manager for several key investment strategies for Nuveen, a $1.3 trillion global asset manager. The $125 billion College Retirement Equities Fund-Stock Account, which she oversees, has outperformed 86% of peers over the past year, according to data compiled by Bloomberg.<\/p>\n Microsoft, Nvidia, Apple<\/a>, and Amazon<\/a>.com were the fund\u2019s biggest holdings as of the end of May.\u00a0<\/p>\n \u201cPeople will say the stock price itself has just done so well, how can you own it?\u201d Malik said. When compared to peers, \u201cit\u2019s not an expensive stock.\u201d<\/p>\n While Nvidia trades at a premium of about 50% to the Nasdaq<\/a> 100 Index, its 12-month forward price-to-earnings ratio has pulled back from a 2023 high of 63 times down to about 40. It\u2019s now valued close to peers such as Advanced Micro Devices<\/a>.<\/p>\n Malik said the AI-fueled rally in Nvidia and Microsoft\u2014which has propelled U.S. stock benchmarks to a series of record highs\u2014is unlike the dot-com bubble<\/a>.<\/p>\n \u201cThese companies are much more dominant because they are not brand new,\u201d she said. \u201cThey\u2019ve been around for years investing in this trend. So I do think it\u2019s different this time.\u201d<\/p>\n<\/div>\n\n\u2018The company that wins in this space\u2019<\/h2>\n
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