Nvidia (NVDA) shares slid 4% in early trading as the market rally lost steam Wednesday afternoon. The stock had tumbled more than 25% from a recent high, along with other semiconductor stocks, after a Piper Sandler analyst pointed out a “great opportunity” for investors to buy shares in the chip giant.
“Fundamentally, NVDA remains the strongest player in the AI accelerator space,” Piper Sandler’s Harsh Kumar wrote, highlighting the company’s next-generation chips. “And we believe the strong tailwinds from the Blackwell architecture, due for release in October, will continue to drive revenues through 2025 as demand outstrips supply.”
“As such, we see significant opportunity in NVDA shares as they have fallen significantly from their highs of $140,” the firm added. Piper rates the stock Overweight and has a $140 price target.
During Monday’s market crash, The Information reported that the launch of Nvidia’s next-generation AI chips could be delayed by three months, affecting some of its biggest customers, including Microsoft, Alphabet and Meta.
Nvidia then released a statement saying that production of its next-generation Blackwell chips was “expected to ramp up” later this year.
Kumar said Advanced Micro Devices (AMD) remains the company’s “top contender” along with Nvidia, as the company continues to gain market share in traditional servers amid struggles against incumbents such as Intel. Intel (INTC) shares fell more than 28% last Friday after reporting disappointing quarterly results.
Piper Sandler’s team believes AMD also has an opportunity if Nvidia’s chips are delayed.
“We believe the NVDA chip delay story is unlikely, but if it is true it would bode well for AMD in the short term if NVDA is struggling with chip supply or timing,” Kumar wrote.
Nvidia shares rose more than 12% last Wednesday after rival AMD’s quarterly results showed that big tech companies continue to invest in data center infrastructure, a positive sign for chip suppliers.
Semiconductor stocks have been volatile in recent weeks as big technology companies led the market decline.
The Philadelphia Semiconductor Index has fallen nearly 15% since the beginning of July, and Piper said the move prompted it to review its coverage and look for “ideas that we think are still fundamentally in good shape.”
The firm sees ON Semiconductor (ON) as being well-positioned in this environment, along with Nvidia and AMD.
Early Wednesday morning, semiconductor stocks continued a rally punctuated by the recent market sell-off that pushed the Nasdaq Composite Index (^IXIC) into correction territory.
The story continues
Nvidia shares fell more than 6% on Monday as Monday’s market sell-off wiped more than $650 billion off the market capitalization of the “Magnificent Seven” stocks.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X at @ines_ferre.
