Nvidia (NVDA) shares erased early gains to fall 2% as the market rally lost momentum Wednesday afternoon. Shares had been rising earlier, along with other names in the semiconductor sector, after analysts at Piper Sandler told investors there was a “tremendous opportunity” to buy shares of the chip giant after it fell more than 25% from recent highs.
“Fundamentally, NVDA remains the strongest player in the AI accelerator space,” wrote Piper Sandler’s Harsh Kumar, highlighting the company’s next-generation chip. “We also believe strong tailwinds from the Blackwell architecture arriving in October will continue to drive revenue through 2025 as demand outpaces supply.”
“As such,” the firm added, “we see tremendous opportunity in NVDA stock with the price significantly down from highs of $140.” Piper has an Overweight rating and a $140 price target on the stock.
During Monday’s market crash, The Reported information Nvidia’s next-generation AI chips are reportedly being delayed by three months, potentially impacting its biggest customers like Microsoft, Alphabet and Meta.
Subsequently, Nvidia released a statement stating that its production of next-generation Blackwell chips is “on track to ramp up” in the second half of the year.
Along with Nvidia, Kumar said Advanced Micro Devices (AMD) remains a “better choice” for the company as it gains share in the traditional server market amid challenges with incumbents like Intel. Intel (INTC) shares fell more than 28% on Friday after a weak quarterly report.
Piper Sandler’s team also sees an opportunity for AMD if Nvidia’s chips prove delayed.
“We don’t think there’s much truth to the NVDA chip delay, but if true, in the short term it would bode well for AMD if NVDA struggles with chip supply and/or timing,” Kumar wrote.
Nvidia jumped more than 12% on Wednesday after peer AMD reported quarterly results that showed Big Tech is continuing to spend on data center infrastructure, a promising sign for chip vendors.
Chip stocks have been volatile in recent weeks as big tech names have led the market downturn.
Since the start of July, the Philly Semiconductor index has fallen nearly 15%, a move that Piper said has prompted it to review its coverage and seek out “ideas that we believe remain fundamentally well positioned.”
Alongside Nvidia and AMD, the firm considers that ON Semiconductor (ON) is well positioned in this environment.
Early Wednesday, chip stocks extended their rally, punctuated by the recent market meltdown that sent the Nasdaq Composite (^IXIC) into correction territory.
Nvidia shares fell more than 6% on Monday, as the Magnificent Seven stocks suffered market cap losses of more than $650 billion in Monday’s market crash.
Ines Ferre is a senior economics journalist for Yahoo Finance. Follow her on X at @ines_ferre.
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