Nvidia Stock Slump Presents Potential Opportunity Ahead of Semiconductor Rebound

• By Staff Editor
• Aug 13 2024

Analysts Expect Chip Rebound in Q4
Bank of America's semiconductor analyst Vivek Arya named Nvidia as one of the firm's top "rebound" picks. In a note, Arya stated their "base case remains for a semiconductor rebound likely in Q4 as seasonal headwinds dissipate." Chip stocks often exhibit weakness in the third quarter before rebounding in the final months of the year.

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Blackwell Chip Delay Concerns Overblown
The recent volatility in Nvidia has been fueled by concerns around the production schedule for its next-generation AI chip called Blackwell. However, Nvidia firmly stated Blackwell production "is on track to ramp" in the second half of 2024. Wall Street analysts have echoed this, with UBS's Timothy Arcuri saying any customer shipment delays will likely be just 4-6 weeks "at most."

AI Growth Trajectory Underestimated?
More broadly, Arcuri argues the market may be underestimating Nvidia's future earnings growth trajectory, particularly in 2026 as AI applications continue proliferating across industries. He maintained a Buy rating and $150 price target, well above current levels around $110.

AI Compute Demand Booming
The crux of the long-term bull thesis on Nvidia remains its leadership position in supplying critical AI compute acceleration for domains like large language models, autonomous vehicles, healthcare, and more. Analysts highlight that commitments from AI labs and enterprises are "rapidly growing" amid an insatiable demand for more AI training and inference capacity.

Attractive Entry Point Ahead of AI Tailwinds
So while volatility is expected to persist for Nvidia's stock through its August 28th earnings report and into the typically weak September period for semiconductors, analysts view the recent share price weakness as an attractive entry point. The outlook remains bullish based on Nvidia's pivotal role powering the AI revolution expected to drive powerful multi-year growth tailwinds.

Risks Remain, but Opportunity Compelling
Of course, no stock is without risk and semiconductor cyclicality is always a factor. But for investors able to withstand near-term choppiness, the contrarian opportunity to buy Nvidia during the current funk is compelling according to this analyst commentary. As AI megatrends play out, Nvidia aims to be at the epicenter supplying key infrastructure.

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