In the video, Jim Cramer discusses Nvidia’s recent 17% drop, highlighting concerns about its high valuation and potential disappointing earnings in 2026, as well as the impact of major customers developing their own chips. He advises investors to exercise caution and consider trimming positions in high-growth stocks like Nvidia due to shifting market dynamics and the importance of risk management.
In the video, Jim Cramer discusses the recent struggles of Nvidia, which has experienced its worst week since November 2018, with a significant drop of 17%. He reflects on the broader market context, noting a decline in major indices like the Dow, S&P, and NASDAQ, and hints at a potential revolt against some of the “Magnificent Seven” tech stocks. Cramer emphasizes the importance of risk management in the current market environment, suggesting that investors should consider trimming their positions in high-growth stocks like Nvidia, especially given the uncertainty surrounding future capital expenditures (capex).
Cramer acknowledges Nvidia’s impressive performance over the past 15 months, where it has tripled in value, but he expresses concern about the possibility of disappointing earnings in 2026. He highlights that while Nvidia remains a high-quality company with a strong franchise, its valuation is high, making it vulnerable to shifts in market sentiment. The discussion touches on the idea that the stock’s value is heavily reliant on future growth expectations, which could be at risk if investors reassess their outlook.
The conversation also delves into the competitive landscape for Nvidia, particularly regarding its relationships with major customers like Microsoft, Amazon, and Google. Cramer points out that these companies may begin to moderate their spending on Nvidia’s products as they develop their own chips for data centers. This shift could impact Nvidia’s growth trajectory, raising questions about its ability to maintain its current growth rates amidst changing market dynamics.
As the discussion progresses, Cramer and his guests analyze Nvidia’s technical indicators, noting that the stock has broken below key support levels, which could signal further declines. They emphasize the importance of monitoring these technical signals and suggest that investors should be cautious until the stock stabilizes. The sentiment around Nvidia has shifted, and the panelists agree that the stock’s recent performance reflects broader market concerns about growth expectations.
In conclusion, while Nvidia has been a strong performer historically, the current market conditions and potential shifts in investor sentiment raise questions about its future prospects. Cramer advises investors to approach the stock with caution, considering both its impressive past performance and the uncertainties that lie ahead. The discussion underscores the need for careful analysis and risk management in navigating the evolving landscape of tech investments.