Nvidia stock (NVDA) closed the week with a 2% loss, continuing a challenging period for the year’s hottest trade. Despite this, Wall Street analysts remain optimistic about Nvidia’s long-term prospects, even as the stock is down about 20% over the last month and more than 25% from its record high.
Key Takeaways
- Nvidia stock closed the week with a 2% loss.
- Analysts remain confident in Nvidia’s long-term prospects.
- Nvidia is down about 20% over the last month and more than 25% from its record high.
- Piper Sandler analysts see a "tremendous opportunity" to buy Nvidia, AMD, and ON Semiconductor.
- New Street Research upgraded Nvidia to a Buy with a $120 price target.
- TSMC, a supplier to Nvidia, posted a 45% year-over-year increase in sales in July.
- Hyperscalers like Microsoft, Meta, Amazon, and Alphabet remain committed to AI investment.
- Jefferies analyst Blayne Curtis notes that AI-related spending is still strong.
- Possible delays for Nvidia’s Blackwell next-generation chip added pressure to the stock.
- Truist Advisory’s Keith Lerner upgraded the tech sector to Overweight.
- Analysts see the recent cooling in the AI trade as an opportunity.
Analyst Insights
Earlier this week, Piper Sandler analysts highlighted a "tremendous opportunity" to buy Nvidia, AMD, and ON Semiconductor following the sector’s recent sell-off. Some analysts also took the opportunity to upgrade the stock during this period.
New Street Research technology infrastructure analyst Antoine Chkaiban noted that plans for 2025 are fairly well set, with hyperscalers expecting to grow capital expenditures. New Street upgraded Nvidia to a Buy this week with a $120 price target.
Strong AI Demand
On Friday, chip manufacturer TSMC, a supplier to Nvidia, reported a 45% year-over-year increase in sales in July, indicating strong AI demand. Chkaiban mentioned that urgent demand across the board mitigates the risk of a pause in shipments as customers wait for the next generation of chips.
Hyperscalers like Microsoft, Meta, Amazon, and Alphabet have remained consistent in their commitment to AI investment, with much of this investment flowing directly to Nvidia.
Market Sentiment
Jefferies analyst Blayne Curtis noted that investors are likely to revisit AI-levered names because spending in this area remains strong. Despite talk of a possible delay for Nvidia’s Blackwell next-generation chip, analysts believe it won’t significantly impact Wall Street expectations.
Truist Advisory’s chief marketing strategist Keith Lerner upgraded the tech sector to Overweight after a 12% decline from its mid-July peak, with semiconductors down almost 20%. Lerner pointed out that despite the drop in stock prices, tech’s forward earnings estimates continue to rise.
Future Outlook
Analysts and strategists see the recent cooling in the AI trade as an opportunity. Lerner noted that in a cooling economic environment, investors are expected to return to tech due to the secular tailwinds from AI and its premium growth prospects. Capital spending trends toward AI continue to rise during the current earnings season.
However, the looming question remains: how will these massive AI investments eventually pay off? Luke Barrs, managing director at Goldman Sachs Asset Management, emphasized the need for caution and patience over the next year or two to see positive outcomes from the GenAI trade.