Nvidia (NVDA) shares erased early trading gains to fall 2% as the market rally ran out of steam Wednesday afternoon. The shares had earlier risen along with other semiconductor names after Piper Sandler analysts told investors there was a “huge opportunity” to buy the chip giant’s shares after they fell more than 25% from their recent highs.
“Fundamentally, NVDA remains the strongest player in AI acceleration,” wrote Harsh Kumar of Piper Sandler, highlighting the company’s next-generation chip. “We also believe the strong tailwinds from the upcoming Blackwell architecture in October will continue to drive revenue through 2025 as demand outpaces supply.”
“Therefore, we see tremendous opportunity in NVDA stock with the price down significantly from its highs of $140,” the company added. Piper gives the stock an overweight rating and a $140 price target.
During the market crash on Monday, Reported information Nvidia is expected to delay the launch of its next-generation AI chips by three months, potentially impacting its biggest customers like Microsoft, Alphabet and Meta.
Later, Nvidia released statement Blackwell said production of its next-generation chip is “on track to ramp up” in the second half of the year.
Along with Nvidia, Kumar said Advanced Micro Devices (AMD) remains the company’s “first choice” as it gains share in the traditional server market amid battles 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 chip production is delayed.
“We believe there is not a lot of truth to the NVDA chip delay, but if true, this would bode well for AMD in the near term if NVDA is having supply and/or chip timing difficulties,” Kumar wrote.
On Wednesday, Nvidia shares jumped more than 12% after AMD’s quarterly results showed that big tech companies are continuing to spend on data center infrastructure, a promising sign for chip suppliers.
Chip stocks have been volatile over the past few weeks as big tech names led the market lower.
Since the start of July, the Philadelphia Semiconductor Index has fallen about 15%, a move that Piper said prompted it to revisit its coverage and look for “ideas that we believe are still fundamentally well-positioned.”
Along with Nvidia and AMD, the company sees ON Semiconductor (ON) as well positioned in this environment.
Early Wednesday, chip stocks continued their rally that was punctuated by the recent market crash that pushed the Nasdaq Composite (^IXIC) into correction territory.
Nvidia shares fell more than 6% on Monday as the “Magnificent Seven” saw more than $650 billion in market value wiped off during Monday’s market plunge.
Ines Ferry is a senior business reporter at Yahoo Finance. You can follow her on X on @ines_ferre.
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