Nvidia stock (NVDA) closed on Friday with a weekly lack of two% as investors proceed to sort through what’s been a difficult last several weeks for the 12 months’s hottest trade.
But Wall Street analysts this week remained confident throughout the long-term prospects for Nvidia, which is now down about 20% throughout the last month and off greater than 25% from its record closing high.
Earlier this week, Piper Sandler analysts called out a “tremendous opportunity” to buy Nvidia, AMD (AMD), and ON Semiconductor (ON) following the sector’s recent sell-off.
Some analysts also took the possibility to upgrade the stock during this sell-off.
“I feel that for 2025 … things are fairly well set,” Recent Street Research technology infrastructure analyst Antoine Chkaiban told Yahoo Finance on Thursday. “Everyone knows roughly how much [hyperscalers] expect to grow capex. Plans are already set.” Recent Street upgraded Nvidia to a Buy this week with a $120 price goal.
On Friday, chip manufacturer TSMC (TSM), a supplier to Nvidia, posted a 45% year-over-year increase in sales in July — a sign that AI demand stays strong.
“We still sense an urgent demand across the board, and that mitigates the danger in a pause in shipments as customers wait for the next generation of chips to be available in volumes,” said Chkaiban.
The so-called hyperscalers — Microsoft (MSFT), Meta (META), Amazon (AMZN), and Alphabet (GOOG, GOOGL) — each remained consistent during recent earnings reports of their commitment to AI investment. And much of this investment flows right to Nvidia.
“Investors will likely revisit the AI-levered names because that inside [semiconductors] continues to be the one area spending is flowing in terms of customer spending as evidenced by increases in capex by multiple hyperscalers this earnings period,” Jefferies analyst Blayne Curtis told Yahoo Finance on Friday.
Talk of a possible delay for Nvidia’s Blackwell next-generation chip put added pressure on the stock earlier this week. A two-month wait for the chips wouldn’t be inconsequential, analysts say, nevertheless it might still not be enough to maneuver the needle on Wall Street expectations.
Curtis’s team stated in a recent note the Nvidia delays “are real, but not a thesis changer.” The company is able to report quarterly results on the tip of August.
Analysts and strategists markets more broadly also see the recent cooling throughout the AI trade as a possibility.
Truist Advisory’s chief marketing strategist Keith Lerner upgraded the tech sector to Obese on Thursday after a 12% decline from its mid-July peak with semiconductors down almost 20%. Lerner noted that despite the drop in the worth of those stocks, tech’s forward earnings estimates proceed to rise.
“This implies the recent setback was due more to crowded positioning versus a shift in fundamentals,” Lerner wrote in a note to clients.
“Moreover, in a cooling economic environment, we expect investors to return back to tech given a variety of the secular tailwinds stemming from artificial intelligence (AI) and its premium growth prospects. Moreover, throughout the present earnings season, we now have seen capital spending trends toward AI proceed to rise.”
But recent sentiment shifts don’t necessarily resolve the looming query, which investors will in time want answered — how do these massive AI investments eventually repay?
“With reference to technology, what’s very apparent is just not only the macroeconomic picture but as well as the incontrovertible incontrovertible fact that people must see … evidence that that GenAI trade is unquestionably driving positive outcomes,” Luke Barrs, managing director at Goldman Sachs Asset Management, told Yahoo Finance on Friday.
“We’ve got to easily be cautious and let it play out over the next 12 months or two.”
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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