Nvidia Leads Tech Stock Rally
Nvidia (NASDAQ:NVDA) stock surged by up to 5% on Monday, leading a broader rally in technology stocks. This rise comes as Wall Street debates whether the recent downturn in the semiconductor sector has been excessive.
Bank of America analyst Vivek Arya identified Nvidia as one of the firm’s top “rebound” picks, anticipating a semiconductor sector recovery by the end of 2024. Arya’s base case predicts a rebound in the semiconductor sector in Q4 as seasonal headwinds ease.
Sector Volatility and Future Outlook
Arya also highlighted Broadcom (NASDAQ:AVGO) and KLA Corporation (NASDAQ:KLAC) as potential beneficiaries of a sector rebound. These companies, alongside Nvidia, are among the most profitable vendors in their respective markets. Despite the PHLX Semiconductor Index (^SOX) dropping nearly 18% over the past month and Nvidia’s stock falling more than 15% in the same period, Arya believes the volatility will persist through Nvidia’s next earnings report on August 28 and into September, historically a challenging month for semiconductor stocks.
Concerns have surfaced about Nvidia’s Blackwell chip distribution, with a report last week indicating a three-month delay for next-generation AI chips. This potential delay could impact major clients like Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG), and Meta Platforms (NASDAQ:META). Nvidia has since confirmed that Blackwell chip production is on schedule for the second half of the year, and analysts expect these issues to be resolved.
Analysts Perspectives and Future Projections
KeyBanc Capital Markets analyst John Vinh expressed confidence that Nvidia will overcome current supply or timing issues and potentially exceed earnings expectations. UBS analyst Timothy Arcuri maintained a Buy rating on Nvidia with a $150 price target. Arcuri anticipates that Blackwell chip shipments will experience only minor delays and believes AI labs and enterprise demand will continue to drive growth.
Arcuri also suggested that the market might be underestimating Nvidia’s future earnings potential. While current projections anticipate peak earnings growth in 2025, Arcuri argues that 2026 could present even stronger growth, based on discussions with customers and market trends.
Featured Image: Undplash
Author Faith Yakubu 
