Nvidia stock (NVDA) closed down 2% for the week on Friday as investors continued to sort out the difficult past few weeks ahead of the year’s hottest trading session.
But Wall Street analysts this week remained confident in Nvidia’s long-term prospects, with the stock down about 20% from last month and more than 25% from its closing high.
Earlier this week, Piper Sandler analysts argued there was a “tremendous opportunity” to acquire Nvidia, AMD (AMD) and ON Semiconductor (ON) following the sector’s recent selloff.
Some analysts saw an opportunity to push the stock higher during this selloff.
“Going into 2025…I think things are looking pretty good,” Antoine Chikaiban, technology infrastructure analyst at New Street Research, told Yahoo Finance on Thursday. “We have a rough idea of how much capital spending growth[hyperscalers]expect. The plan is set in stone.” New Street upgraded NVIDIA to a “buy” this week with a price target of $120.
On Friday, chipmaker TSMC (TSM), a supplier to Nvidia, announced that July sales rose 45% from a year earlier. This shows that demand for AI remains strong.
“We still see urgent demand across the board, and the risk of shipments being paused is reduced as customers wait for next-generation chips to become available in large quantities,” Chkaiban said. said.
So-called hyperscalers Microsoft (MSFT), Meta (META), Amazon (AMZN), and Alphabet (GOOG, GOOGL) have all been consistent about their commitment to AI investments in their recent earnings reports. . And much of this investment will flow directly to Nvidia.
Jefferies analyst Blaine Curtis told Yahoo Finance: “(Semiconductor) internal spending remains a key issue from a customer spending perspective, as evidenced by the increased capital spending this fiscal year by several hyperscalers. Investors will reconsider stocks that utilize AI.” on friday.
Earlier this week, talk of possible delays for NVIDIA’s Blackwell next-generation chips put further pressure on the stock. Analysts say waiting two months for a chip isn’t a big deal, but it’s still not enough to significantly change Wall Street expectations.
Curtis’ team said in a recent note that Nvidia’s delays are “real, but not theory-altering.” The company plans to release quarterly results at the end of August.
Analysts and strategists looking at the market more broadly also see the recent cooling in AI trading as an opportunity.
Keith Lerner, chief marketing strategist at Trust Advisory, on Thursday upgraded the tech sector to “overweight,” with semiconductors down about 20% and the tech sector down 12% from its peak in mid-July. Lerner noted that even as the prices of these stocks have fallen, future earnings expectations for tech companies continue to rise.
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“This suggests that the recent weakness is due to crowded positioning rather than changes in fundamentals,” Lerner wrote in a note to clients.
“Additionally, as the economic environment cools, we expect investors to return to the technology industry given some of the long-term tailwinds stemming from artificial intelligence (AI) and its premium growth prospects. In the current earnings season, we’re seeing trends in capital spending.”Interest in AI continues to grow. ”
But the recent shift in sentiment doesn’t necessarily solve the pressing question investors will eventually want answered: How will these large-scale AI investments ultimately pay off? there is no.
“What’s very clear about technology is the fact that people want to see more than just the macroeconomic picture… This is proof that GenAI trading is indeed delivering positive results.” he told Yahoo Finance on Friday.
“We just have to be cautious and wait for this to continue for the next year or two.”
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X @ines_ferre.
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