So far in September, the Nvidia (NASDAQ:NVDA) share price has been under pressure. It’s true that even with the 8% move lower, the stock’s still up 142% over the past year. However, such a dip could represent a great buying opportunity for me, especially if bought within my Stocks and Shares ISA. Here’s why I’m mulling it over.
The question around growth
One of the main benefits of me investing via my ISA is that I don’t have to pay capital gains tax (CGT) when selling a share. As such, buying a stock that I think has high growth potential and including it in my ISA makes sense. Even if the share price doubles in value, I’ll be able to enjoy all of that profit myself without some of it being eaten away by tax.
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So buying a growth stock like Nvidia makes sense from that angle. However, I then have to turn to think about whether the company has further growth potential. After all, just because it’s jumped 142% in the past year doesn’t mean that it’ll do the same thing for the next year.
This is probably the biggest risk I see right now. The company has a market-cap of $2.6trn, making it the third most valuable stock in the world. It’s tricky to see how this could grow by several more trillion. Put another way, Nvidia’s already so large that it makes it difficult to see how it can sustain the growth rate from the past (when it was smaller).
Reasons for optimism
Nvidia fans would likely make the argument that the firm’s still experiencing high demand for the products. With reference to the names of different popular chips, the CEO commented at the latest quarterly earnings that “Hopper demand remains strong, and the anticipation for Blackwell is incredible.”
As such, there’s clearly a huge market that Nvidia can service, one that it’s nowhere near fulfilling at the moment. It’s impossible to put a figure on the size of this market, but certainly there’s scope for the firm to grow.
Another factor that could help the stock outperform is the continuous development of new products. One reason why companies like Apple do so well is the upgrades and add-ons of popular hardware. Nvidia’s working on doing the same, such as with the new, more powerful Blackwell superchip. There will be updated chips in the future too, creating additional sources of revenue for the brand.
Buying the dip
If you asked me a year ago whether I’d buy the stock if it fell by around 10%, I would have said yes. Right now, I’m still saying yes, but with much less conviction. I’m likely going to buy a small amount of the stock within the next couple of weeks. The overall sentiment around the outlook for the company’s still very good. Yet given the extent of the rally over the long term, I’m not investing a lot as I feel further gains could be more limited.
