Perhaps no two stocks represent current megatrends better than NVIDIA Corp (NASDAQ: NVDA) and Tesla Inc (NASDAQ: TSLA).
For many years Tesla has been the poster child for the transition to electric vehicles. Meanwhile, Nvidia this year has become the beacon for artificial intelligence.
And both stocks have been popular with Australian investors looking for exposure to the US market.
But they have come off the boil in recent weeks.
Nvidia is down about 14% since the start of September, while the Tesla share price is a shocking 22% lower than where it was 10 October.
So is it a buying opportunity for shrewd Aussie investors?
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Balancing hot demand with trade embargos
Shaw and Partners portfolio manager James Gerrish said in Market Matters that technology stocks generally have been selling off from macroeconomic concerns.
"US Big Tech has certainly corrected over recent weeks with the NASDAQ-100 (NASDAQ: NDX) index correcting almost 12% under the weight of rising bond yields and concerns around the conflict between Israel and Hamas."
Nvidia dipped to near the US$400 mark last week, and his team favours the risk-reward probability at around that entry price.
"But we are conscious that this is a high beta/volatile stock, its next earnings report will be on Tuesday [21st] of November after the US close."
The chipmaker is enjoying massive sales from the AI boom, but is simultaneously dealing with increasing US government bans on exporting certain products to China.
Tesla shares at nice risk-reward
As for Tesla, Gerrish's analysts also like the risk-reward if you can buy it around the US$200 mark.
"But we're conscious that the medium trend is down after the shares traded above US$400 in mid-2021," he said.
"Its next earnings report will be received on Wednesday 24/1/2024 after the US close."
Tesla enjoys outstanding margins compared to old-world car makers, but is slashing the prices of its vehicles to gain market share.
Despite the recent dips, Tesla shares are still up more than 90% so far in 2023, and Nvidia has rocketed a phenomenal 196%.
So what if you only had cash to buy one of these two darlings?
"These are two very different companies but of the two we prefer NVIDIA at this stage of their respective cycles," Gerrish said.
