Nvidia (NVDA) stock was on track for a weekly loss of nearly 2% on Friday as investors continue to sort out what has been a challenging few weeks for the most important trade of the year.
But Wall Street analysts remained confident this week in the long-term prospects for Nvidia, which is now down about 20% over the past month and more than 25% from its record closing high.
Earlier this week, Piper Sandler analysts noted a “huge opportunity” to buy Nvidia, AMD (AMD) and ON Semiconductor (ON) after recent sell-offs in the sector.
Some analysts also took the opportunity to upgrade the stock during this sell-off.
“I think for 2025…things are pretty well set up,” Antoine Chakiban, an infrastructure analyst at New Street Research, told Yahoo Finance on Thursday. “We know roughly how much [hyperscalers] “We expect capital expenditures to grow. Plans are already in place.” New Street upgraded Nvidia to Buy this week with a $120 price target.
On Friday, chipmaker TSMC (TSM), a supplier to Nvidia, reported a 45% year-over-year increase in sales in July — a sign that demand for AI remains strong.
“We still feel a pressing demand across the board, and this mitigates the risk of shipments being temporarily halted as customers wait for the next generation of chips to be available in large quantities,” Shakiban said.
The so-called hyperscalers — Microsoft (MSFT), Meta (META), Amazon (AMZN), and Alphabet (GOOG, GOOGL) — have all been consistent in their commitment to investing in AI through recent earnings reports. Much of that investment is flowing directly to Nvidia.
“Investors are likely to reconsider AI-based names because that’s where the [semiconductors] “Spending continues to be the one area where there is momentum in terms of customer spending as evidenced by increases in capital expenditures across several large companies this earnings period,” Jefferies analyst Blaine Curtis told Yahoo Finance on Friday.
Talk of a potential delay to Nvidia Blackwell’s next-generation chip added pressure to the stock earlier this week. Analysts say a two-month wait for chips won’t be insignificant, but it won’t be enough to move the needle on Wall Street’s expectations.
Nvidia’s delays are “real, but don’t change the thesis,” Curtis’ team said in a recent note. The company is scheduled to report its quarterly results in late August.
Analysts and strategists who look at the broader markets also see the recent slowdown in AI trading as an opportunity.
Keith Lerner, chief marketing strategist at Truist Advisory, upgraded the technology sector to overweight on Thursday after it fell 12% from its mid-July peak, with semiconductors down nearly 20%. Lerner noted that despite the decline in prices for these stocks, future earnings estimates for tech continue to rise.
“This suggests that the recent setback was more due to oversold positions than a shift in fundamentals,” Lerner wrote in a note to clients.
“Furthermore, in a cool economic environment, we expect investors to return to technology given some secular tailwinds from artificial intelligence (AI) and its strong growth prospects. Furthermore, during the current earnings season, we have seen capital spending trends toward AI continue to pick up.”
But recent shifts in sentiment don’t necessarily resolve the looming question that investors will want answered in due course — how will these massive investments in AI ultimately pay off?
“When it comes to technology, what’s very clear is not only the macroeconomic picture but also the fact that people want to see… evidence that GenAI trading is actually having positive results,” Luke Bars, a managing director at Goldman Sachs Asset Management, told Yahoo Finance on Friday.
“We have to be careful and let it play out for the next year or two.”
Ines Ferry is Yahoo Finance’s chief business reporter. Follow her on X at @ines_ferre.
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