As Nvidia's stock enters a bear market, bargain hunters see a golden buying opportunity

By Britney Nguyen

Portfolio managers say chip demand should be resilient even in a period of political uncertainty

The election results have added to jitters about the tech sector, with Nvidia shares now off more than 20% from recent highs.

Nvidia's stock entered a bear market Thursday afternoon as the selloff in technology stocks escalated.

The chip maker's stock (NVDA) ended the day down 9.3%, marking its largest percentage decrease since January 2025, according to Dow Jones Market Data. Shares have lost 24.1% from their record close on Oct 6. A bear market is defined as a fall of 20% or more from a recent peak.

Nvidia also lost $447 billion in market capitalization Thursday, which was its second-largest one-day decline, the data showed. The company has seen $1.4 billion in market cap evaporate since the peak a month ago.

On Thursday, investors were "sorting through the economic reality where the AI buildout is the driver of the economy," Michael Monaghan, a portfolio manager at Founder ETFs, told MarketWatch. Following the midterm elections, investors have been worried that Democrats will put up more roadblocks to data-center expansion.

Monaghan attributed the day-to-day volatility to hedge funds trading with high leverage and tighter risk limits. As shares of companies start to fall, Monaghan said those traders have to pull out quickly, which can lead to larger intraday moves. But that also means the market can turn around just as fast, he added.

Nvidia's revenue is expected to grow 70% next year, Monaghan said, and despite concerns over a halt to data-center construction, he said building will likely continue, and therefore demand for chips will remain strong.

Going into Nvidia's earnings report later this month, Monaghan sees a buying opportunity given the stock has been battered. Investors will start to see the impact from Nvidia's new Rubin chips, he said, noting that SpaceX (SPCX) just signed a $40 billion financing deal with Apollo Global Management (APO) to secure the chips.

The underlying fundamentals of strong AI spending and demand are still intact, he said, and "when a stock price moves in opposite direction of the fundamentals, those typically become very good setups."

David Wagner, a portfolio manager at Aptus Capital Advisors, told MarketWatch that Nvidia is trading more cheaply because investors are worried about how intertwined its earnings are with the massive amounts of spending on AI infrastructure that could eventually slow down.

Still, "Nvidia likely has a wider moat than any other AI player, between its chips, its software ecosystem and the fact that developers are built around it," he said in emailed comments.

Therefore, if investors believe that AI will be a multi-year buildout, the decline Thursday "looks more like a valuation reset than a broken thesis," he said, adding that Nvidia's stock looks like it's gone "on sale."

-Britney Nguyen

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11-05-26 1631ET