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Nvidia NVDA+0.84% shares are beginning to climb after a big drop that erased $900 billion in market value.
Nvidia’s stock price jumped 5% in Tuesday morning trading. Ahead of the company’s second quarter earnings report Aug. 28, analysts at Goldman Sachs GS-1.59% and Bank of America BAC+0.15% say the stock is set to make a comeback — but it may take a little while.
Bank of America’s Vivek Arya named Nvidia a top “rebound” stock in a note to investors Monday. While noting that Nvidia’s volatility could persist through September, he said a rebound is likely in the fourth quarter as “seasonal headwinds dissipate.”
Goldman Sachs’ technical strategist Scott Rubner advised investors to “buy the dip,” noting that the stock market could be set for a turnaround at the end of August, with markets hitting new highs after the U.S. presidential election in November.
In July, global chip stocks, including Nvidia, fell in response to a Bloomberg report that the Biden administration was considering using its toughest export control, the foreign direct product rule, to prevent sales of advanced chipmaking equipment to China. Chip stocks also fell on comments about Taiwan made by Former President and Republican nominee Donald Trump. However, the massive chip selloff, analysts at Jefferies JEF-2.81% and Bank of America said, was an overreaction. Then in August, reports of design flaws and production delays of the company’s newest, most powerful Blackwell series caused shares to drop further. Adding to the companies woes is investors’ skepticism of hefty AI bills at Nvidia’s biggest customers, including Microsoft MSFT-1.51% and Google GOOGL+0.35%.
Arya noted that Nvidia did not give indications of Blackwell delays during a recent presentation. He added that he believes concerns about whether Nvidia’s customers will monetize AI are unfounded.
“Enterprise and sovereign AI adoption has yet to start in a big way,” Arya said, adding that Nvidia’s “flagship Blackwell AI product, best suited for AI, has not even started to ship yet.”
“In other words, waiting for large cloud providers to confess about low AI ROI is a wasted cause, in our view.” Basically, Arya thinks Nvidia will see no slowdown in orders from its big tech customers — if anything, it will be the opposite, in his view.
-Britney Nguyen contributed to this article