Nvidia named top ‘recovery’ stock as Wall Street claims recent downturn overblown

Nvidia (NVDA) stock rose about 5% on Monday, leading technology stocks higher as Wall Street continued to debate whether the recent slump in the semiconductor sector has gone too far.

on monday, Bank of America analyst Vivek Arya noted that Nvidia is one of the company’s top picks for a “rebound” amid what he expects to be a semiconductor comeback by the end of 2024.

Our basic condition remains [semiconductor] “Financial markets are likely to see a recovery in the fourth quarter as seasonal headwinds dissipate,” Arya wrote in a note to clients.

Arya noted that Broadcom (AVGO) and KLA Corporation (KLAC) could also benefit from the recovery because they are “the most profitable vendors in their end markets,” in addition to Nvidia.

PHLX Semiconductor (^SOX) has fallen about 18% in the past month, while Nvidia shares have fallen more than 15% over the same period. A wave of large-cap tech companies has flooded the sector.

Arya expects the volatility to continue through Nvidia’s next earnings report on Aug. 28 and into September, the worst month of the year historically for semiconductor stocks. Arya noted that the current uptrend in semiconductor stocks has only been going on for four quarters, while previous rounds typically lasted nearly 10 quarters.

Nvidia shares, in particular, have been under pressure amid growing concerns about the distribution of its Blackwell chip. Last week, Reported information Nvidia is expected to delay the launch of its next-generation AI chips by three months, which could impact major customers like Microsoft (MSFT), Alphabet (GOOGL, GOOG), and Meta (META).

Then Nvidia released statement Blackwell has announced plans to ramp up production of its next-generation chips in the second half of the year. Wall Street analysts believe the problem will be solved.

“If it’s a supply or timing issue, I think most investors are willing to look at it from that perspective,” John Vinh, an equity research analyst at KeyBank Capital Markets, told Yahoo Finance. “If it’s a demand issue, I think we’re going to have other issues here with Nvidia. But from our perspective, we think they’re going to outperform Nvidia and push their stock up.” [earnings guidance]“We don’t think near-term demand will be a problem at all.”

UBS analyst Timothy Arcuri maintained his buy rating on the stock and $150 price target in a note to clients on Monday while also noting that he believes shipments to Blackwell’s large-volume customers are likely to be delayed by four to six weeks “at most.”

The story continues

“Major customers are expected to start receiving their first Blackwell copies in April 2025,” Arcuri wrote. “AI Labs is still scaling and extending its copy commitments, and companies are growing rapidly as a share of the order mix—both bullish indicators.”

Additionally, Arcuri claimed that the market may be underestimating Nvidia’s future earnings growth. At the moment, Arcuri believes the market is pricing in Nvidia’s earnings growth in 2025. But Arcuri claimed that 2026 “looks more likely to be growth again given our discussions with customers.”

Josh Schaffer is a reporter at Yahoo Finance. You can follow him on X @_Joshshafer.

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