Cramer says 'everything still revolves around Nvidia' despite its lagging stock

Nvidia shares fell ~2% Tuesday, trading near the stock’s lowest valuation of the year at just under 19x forward earnings, as bearish sentiment builds around AI-chip demand. Cramer argues the selling may be overdone, noting even customers developing in-house AI chips (e.g., China’s DeepSeek) still rely on Nvidia’s technology, while Nvidia also disputes SemiAnalysis concerns about delays to its next-gen Kyber server system. Overall, the piece frames near-term cost/delay skepticism as the main overhang, but maintains a view that Nvidia’s leadership position is not under threat.

Analysis

This looks more like a positioning washout than a fundamental break. NVDA still sits on the critical path for AI training and early inference, but the market is starting to price a slower conversion of AI spend into NVDA revenue as customers pursue custom silicon to improve bargaining power. That shifts incremental value capture toward adjacent names with less obvious headline exposure — networking, memory, and foundry ecosystems — while leaving “pure GPU beta” vulnerable to multiple compression if sentiment stays fragile.

Near term, the biggest risk is flow, not competition: NVDA can remain weak if it is being used as a source of funds for other high-beta tech trades. The next meaningful catalyst window is the next 1-2 earnings cycles; the key falsifiers are guidance reduction, gross margin compression, or evidence that next-gen product timing slips enough to defer hyperscaler deployments. If none of that appears, the drawdown is likely to mean-revert as the market remembers NVDA is still the earnings anchor of the AI stack.

The contrarian view is that consensus is over-interpreting custom chip announcements as replacement rather than leverage. In practice, many customers will dual-source or build partial silicon to lower costs, but still depend on Nvidia’s software ecosystem and networking attach for scale, which preserves pricing power longer than the tape implies. Over 6-18 months the more material risk is a lower share of wallet, not a collapse in demand; that argues for selective relative-value trades rather than a blanket bearish call.

Key Decisions for Investors

• Buy NVDA on weakness via a 1-2 month call spread or starter long only if it holds the recent low area; risk/reward improves if the stock is being sold for positioning rather than fundamentals.
• Pair long NVDA / short AMD for 1-3 months to express the view that Nvidia remains the reference architecture while alternative accelerators face slower adoption and weaker pricing power.
• If you want to isolate deployment-delay risk, pair long NVDA / short SMCI or DELL into any bounce; server integrators are more exposed to timing slippage than the chip supplier.
• Set an alert on hyperscaler capex commentary from MSFT, AMZN, and GOOG; any downward revision would be the strongest falsifier for the bullish NVDA re-rating thesis.
• Avoid chasing the selloff with outright shorts unless there is confirmed product-timing or margin deterioration; absent that, the setup favors mean reversion over structural downside.