Renowned portfolio manager, Dan Niles, has expressed confidence in the future prospects of Nvidia Corp., despite the recent 14% dip in the company's shares last week. Niles, the founder of Niles Investment Management, sees the current setback as a temporary phase and predicts that both revenue and stock value will double over the next several years.

Niles attributes the weaker sentiment towards technology stocks to the fact that companies are increasingly investing substantial amounts of money in the field of artificial intelligence (AI). While the spending on AI infrastructure is on the rise, revenue forecasts are declining, according to Niles in an interview with CNBC. Highlighting the quarterly reports from major players like Alphabet, Microsoft, and Amazon, he emphasized their increased spending on AI infrastructure. However, Niles pointed out that at some point, investors will expect a return on these investments.

To support his argument, Niles referred to Nvidia's revenue growth patterns in the aftermath of the COVID-19 pandemic. Following the surge in revenue growth to 80% year-over-year, there was a subsequent slowdown in demand, causing Nvidia's revenue growth to turn negative by -20%. Consequently, the stock experienced a significant decline of 66% during this digestion phase. Niles also emphasized that the pace of AI spending is much faster than what was seen during the internet infrastructure build-out.

Nevertheless, Niles remains optimistic about the future of Nvidia. He firmly believes that the company's revenues will double from their current levels, and consequently, the stock will also double in value over the next few years. The portfolio manager suggests that there is still ample room for further spending in the AI sector.

Looking beyond the tech sector, Niles recommends considering investments in consumer staples, utilities, and telecom services when the Federal Reserve begins cutting rates. He points to the recent performance of the S&P 500, highlighting the decline in both the overall index and the equal-weighted S&P 500, in comparison to the drop in major tech companies. Niles advises investors to assess where the opportunities lie and make strategic decisions accordingly.

Niles also shared his views on the possibility of a recession, stating that the current abundance of job openings outweighs the number of people seeking employment. He believes that in a services-led economy, it is unlikely to see a recession in such an environment.

In conclusion, despite the recent decline in Nvidia's stock, portfolio manager Dan Niles remains positive about the future prospects of the company, expecting both revenue and stock value to double in the coming years. While acknowledging the increased spending on AI by major corporations, Niles asserts that these investments will yield results over time. Investors are advised to diversify their portfolios and consider sectors beyond tech for potential growth opportunities.