Nvidia Corp., the tech titan synonymous with the AI boom, is currently facing a storm of challenges that, paradoxically, might just turn out to be a golden buying opportunity for investors, according to Bank of America analysts. The stock, which had been soaring on the wings of high expectations, has recently seen a dip—down roughly 15% since its August earnings report, a time when it didn’t quite meet the sky-high hopes of its investors. Now, with hurdles such as production bottlenecks, increasing regulatory scrutiny, shifting investor sentiment around AI, and overall market turbulence, the chipmaker’s valuation looks more tempting than ever.
$NVDA Getting close to being actionable. Came out to the 50% retracement from the bottom but got turned away. Watch for high volume with a pivot over today’s high, $110 if you want to buy the dip. pic.twitter.com/lwTTLdOpzF
— Phil Fratantonio (@PhilFrat) September 4, 2024
Bank of America’s analysts, led by Vivek Arya, argue that these short-term headwinds may open the door for savvy investors. Nvidia’s shares have slipped into the lower quartile of their valuation over the past five years, which the analysts believe presents an “enhanced” entry point. Essentially, this turbulence could offer a rare moment to grab Nvidia stock at a compelling price.
A major factor in the company’s near-term struggles lies in production issues surrounding its highly anticipated Blackwell chips. Investors are waiting for concrete supply chain data to signal that Nvidia is ready to ship these next-generation products. According to Bank of America, such data could serve as the key catalyst for a recovery, with Blackwell shipments expected to provide a significant boost to Nvidia’s fundamentals.
NVIDIA’S $NVDA ROUT MAKES FOR COMPELLING CHANCE TO BUY, BANK OF AMERICA SAYS – Bloomberg pic.twitter.com/qogl28EK1l
— TRADYOM (@tradyom_) September 5, 2024
Nvidia’s stock has been on a wild ride this year, swinging between record highs and steep losses, which have echoed across the broader S&P 500 Index, where the company is now the third-largest holding behind Apple and Microsoft. Despite the recent setbacks, Nvidia remains the top performer on the S&P 500, with its stock price up about 115% for the year. However, the volatility is undeniable. Shares briefly rose 3.2% in Thursday’s intraday trading but are still on track to end the week down more than 10%, marking the worst week since April.
While the near-term outlook may seem murky, Bank of America’s analysts maintain a bullish long-term view. As companies continue to scale their AI infrastructure, Nvidia’s chips—especially the Blackwell and Hopper lines—are expected to play a critical role. The report highlighted that the tech industry will likely spend the next one to two years building out AI capabilities using Nvidia’s Blackwell chips, which offer a 4x increase in AI training power and a staggering 25x improvement in inference tasks. What the industry has accomplished with Nvidia’s current Hopper chips is just the beginning; Blackwell represents the future.
In light of these factors, Bank of America reiterated its buy rating on Nvidia, dubbing it a top pick within the tech sector. With a price target of $165, the firm projects a potential upside of 55% from Nvidia’s recent closing price.
Nvidia is up today by about 2.5%, BOA say that it is a buy. Looking at the chart, and as we pointed out a double top formed a couple of weeks ago. Investors may not be keen on jumping on the AI bandwagon now. pic.twitter.com/q3xX3eG3Ny
— InsightWeekly (@insight_weekly) September 5, 2024
On Wall Street, the sentiment around Nvidia is overwhelmingly positive. The company boasts 66 buy ratings and 8 holds, with no sell recommendations, according to Bloomberg data. Despite the short-term noise, the broader consensus suggests that Nvidia’s long-term growth story remains intact, anchored by its dominance in the AI space and its ability to drive technological advancements.
In essence, while Nvidia might be navigating some choppy waters at the moment, those with an eye on the future see it as a high-value asset poised for a rebound as AI continues to reshape industries.
Major Points
- Nvidia’s stock has dropped around 15% since August, presenting a potential buying opportunity as Bank of America analysts point to long-term gains despite current challenges.
- The dip is attributed to production issues with Nvidia’s next-gen Blackwell chips and broader market turbulence, though these short-term hurdles may offer an attractive entry point for investors.
- Nvidia’s stock remains up 115% for the year, despite its current volatility, maintaining its position as the S&P 500’s top performer.
- Bank of America highlights the transformative potential of Nvidia’s Blackwell chips, expected to significantly boost AI capabilities across industries in the coming years.
- Wall Street remains overwhelmingly bullish, with 66 buy ratings and no sell recommendations, signaling confidence in Nvidia’s long-term growth prospects.
Al Santana – Reprinted with permission of Whatfinger News