Nvidia’s stock fell more than 5% on Wednesday, leading chip stocks lower and pushing all three major indexes into the red. The sell-off came despite a bullish note from Piper Sandler analysts, who highlighted a “tremendous opportunity” to buy into the sector after the recent decline. “Fundamentally, NVDA remains the strongest player in the AI accelerator space,” wrote Piper Sandler’s Harsh Kumar.
He emphasized the company’s forthcoming next-generation chip. “We believe that strong tailwinds from the Blackwell architecture, coming in October, will drive revenues well into 2025 as demand exceeds supply.” The firm has an Overweight rating and a $140 price target on Nvidia stock. Concerns circulated Monday about potential delays to Nvidia’s upcoming AI chips, which could impact major customers like Microsoft, Alphabet, and Meta.
However, Nvidia issued a statement asserting that Blackwell chip production “is on track to ramp” in the second half of the year.
Nvidia stock plunges after earnings
Kumar also highlighted Advanced Micro Devices (AMD) as another “Top Pick” due to its increasing share in the traditional server market amid difficulties faced by competitors like Intel.
Last Friday, Intel stock fell more than 28%. Piper Sandler’s team also sees AMD benefiting if Nvidia’s chips face any delays. AMD stock fell 1% on Wednesday.
Last week, Nvidia’s stock movements followed AMD’s quarterly results, showing continued spending on data center infrastructure by Big Tech, a promising sign for chip suppliers. Chip stocks have been extremely volatile recently as major technology names led the market downturn. Since the start of July, the Philly Semiconductor Index is down almost 15%, prompting Piper Sandler to revisit its coverage and identify fundamentally strong investment opportunities.
Beyond Nvidia and AMD, the firm also favors ON Semiconductor as well-positioned in the current environment.
