Nvidia Corporation (NASDAQ:NVDA) shares increased by more than 2% early Wednesday, contributing to a broader rebound in chip stocks. This surge followed a call from Piper Sandler analysts who identified a “tremendous opportunity” to buy Nvidia stock after a drop of over 25% from recent peaks.
Piper Sandler analyst Harsh Kumar emphasized that Nvidia remains a leading player in the AI accelerator market, pointing to the company’s upcoming next-generation chip. Kumar also noted that the anticipated Blackwell architecture launch in October is expected to drive revenue growth well into 2025 as demand continues to outstrip supply. Piper Sandler has maintained an Overweight rating on Nvidia with a price target of $140.
The rebound comes after a challenging period for Nvidia, during which The Information reported a potential three-month delay for Nvidia’s next-generation AI chips. This news raised concerns about possible impacts on major clients such as Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms Inc. (NASDAQ:META). However, Nvidia later confirmed that production of the Blackwell chip remains on schedule for the year’s second half.
In addition to Nvidia, Piper Sandler’s Kumar highlighted Advanced Micro Devices, Inc. (NASDAQ:AMD) as a ‘Top Pick’ due to its increasing market share in the server sector, especially as Intel Corporation (NASDAQ:INTC) struggles. Intel’s stock saw a significant decline of over 28% last Friday following a disappointing quarterly report. Piper Sandler also sees potential benefits for AMD if Nvidia experiences delays with its chip production.
Nvidia’s stock had jumped more than 12% the previous Wednesday after AMD’s quarterly results indicated sustained spending by Big Tech on data center infrastructure, a positive sign for chip suppliers.
Chip stocks have been volatile recently, with the Philly Semiconductor Index dropping nearly 15% since early July. This downturn prompted Piper Sandler to reassess its coverage and seek investment opportunities within the sector. Alongside Nvidia and AMD, the firm also views ON Semiconductor Corporation (NASDAQ:ON) as well-positioned in the current market environment.
The early Wednesday gains in chip stocks followed a recent market correction that affected the Nasdaq Composite (^IXIC), which had entered correction territory. Nvidia’s stock had fallen more than 6% on Monday as part of a broader decline in the “Magnificent Seven” stocks, which collectively saw a market cap loss exceeding $650 billion during the market drop.
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