Wall Street major banks are optimistic about NVIDIA's rebound prospects, bluntly stating that semiconductor stocks have recently fallen too far
Wall Street major banks believe that NVIDIA's stock price has fallen too much and are optimistic about its rebound prospects. Analysts predict that the semiconductor industry will recover before 2024, with NVIDIA, Broadcom, and KLA possibly benefiting from the industry rebound. NVIDIA's stock has recently been affected by design flaws, and the delayed release of the new Blackwell B200 chip may have a direct impact on its quarterly earnings
According to the financial news app Zhitong Finance, as investors demand more clear results from artificial intelligence (AI) investments and concerns about a US economic recession intensify, tech stocks have been sold off in succession. Among them, the chip giant NVIDIA (NVDA.US) benefited the most in this wave of AI investment frenzy, dropping over 15% last month, while the Philadelphia Semiconductor Index fell nearly 18% during the same period.
However, NVIDIA (NVDA.US) rose more than 4% on Monday, leading the tech stocks. Several Wall Street giants including Bank of America and UBS still hold a positive view on NVIDIA, stating that the recent decline in the semiconductor industry has been overdone.
Bank of America analyst Vivek Arya stated that NVIDIA is one of the bank's top choices for a "rebound" and expects the semiconductor industry to recover by the end of 2024. In a report, the analyst mentioned, "Our base case remains that with the dissipation of seasonal headwinds, the semiconductor industry could see a rebound in the fourth quarter." He pointed out that Broadcom (AVGO.US) and KLA Corporation (KLAC.US) could also benefit from the rebound in the semiconductor industry, as they are "the most profitable suppliers in their respective end markets" alongside NVIDIA.
Vivek Arya believes that volatility may persist until NVIDIA's next earnings report on August 28 and extend into September, as historically September has been the worst-performing month for semiconductor stocks. He noted that the current uptrend in semiconductor stocks has only lasted for four quarters, whereas previous uptrends typically lasted close to ten quarters.
Due to concerns about the sales of its Blackwell chips, NVIDIA's stock has been under pressure recently. It is reported that due to design flaws, NVIDIA has informed its customers that the new Blackwell B200 chip will be delayed for three months or longer, with mass shipments postponed to next year's Q1. The Blackwell chip was originally planned to begin mass production in October 2024, and if delayed until April 2025, it will directly impact NVIDIA's quarterly earnings.
In response to this, NVIDIA told the media that the strong demand for the Hopper chip and the production plan for the Blackwell chip have not changed. This means that even if the B200 is delayed, the impact on NVIDIA's revenue may not be significant, as the market demand for the Hopper chip remains strong.
Several Wall Street analysts also believe that this issue will be resolved. John Vinh, a stock research analyst at KeyBanc Capital Markets, stated, "If this is really a supply or timing issue, I think most investors are willing to overlook it. If this is a demand issue, I think we would see other problems emerging for NVIDIA. But from our perspective, we believe NVIDIA will exceed and raise profit guidance. We don't think near-term demand will be a problem at all."
UBS analyst Timothy Arcuri believes that the shipment of Blackwell chips to customers could be delayed by "up to" four to six weeks at most. He maintains a "buy" rating on NVIDIA with a target price of $150. He said, "Major customers should have the first batch of Blackwell chips by April 2025." The AI lab is still expanding, and the proportion of enterprises in the demand mix is also growing rapidly, both of which are bullish indicators."
In addition, Timothy Arcuri believes that the market may be underestimating NVIDIA's future earnings growth. He stated that the market currently expects NVIDIA's earnings growth to peak in 2025, but he believes that based on discussions with customers, "it seems more likely to grow again in 2026."