The Strength of Nvidia Amid the AI Boom: Analysts Remain Bullish

Key Takeaways

• Nvidia shares rebounded after falling into correction territory, with analysts expressing confidence in the chipmaker’s strengths during the AI boom.
• Bank of America views Nvidia’s recent selloff as a “refreshing pause” and remains optimistic about its market share potential.
• Wedbush maintains a bullish stance on Nvidia as a dominant player in the AI era, citing the uncharted territory of investing in AI.
• CFRA sees the recent decline in Nvidia’s stock price as reasonable given its significant gains and believes in its long-term growth prospects.

Nvidia (NVDA) shares experienced a 2% gain on Wednesday, bouncing back from correction territory as analysts reassured investors about the chipmaker’s resilience amid the artificial intelligence (AI) boom.

Bank of America Says Nvidia Stays Top Pick After ‘Refreshing Pause’

Bank of America analysts characterized Nvidia’s recent selloff as a “refreshing pause,” emphasizing that stock volatility is not uncommon and expressing confidence in the company’s ability to maintain or increase its market share. The recent dip marked the ninth time since ChatGPT’s launch in 2022 that Nvidia shares saw a drop of 10% or more, according to Bank of America research.

Various market factors contributed to the recent decline, including higher-than-expected inflation, market volatility, competition concerns, and “AI stock fatigue,” among other issues highlighted by the analysts.

Despite concerns about chip announcements from tech giants like Google and Intel, Bank of America reiterated its belief that Nvidia remains a top pick in the industry. The analysts anticipate Nvidia will continue to dominate the accelerator market, capturing over 75% of the approximately $90 billion market share. They also predict that in-house custom chips from companies like Google, Microsoft, and Amazon will account for 15% to 20% of the market, with another 15% to 20% spread across competitors like AMD and Intel.

Wedbush Remains Bullish on Nvidia as Dominant Player in AI Era Amid ‘Uncharted Territory’

Wedbush reaffirmed its bullish outlook on Nvidia as a key player in the AI era, emphasizing that the “AI revolution” has arrived. Analyst Matt Bryson highlighted the unpredictability of investing in tech stocks, particularly in the AI sector, where future performance is subject to more variability compared to established industries.

Bryson noted that Nvidia’s results have a significant impact on related stocks and expects the latest version of Nvidia’s AI technology, Blackwell, to boost the company’s earnings upon its market release.

CFRA Unfazed by the Pullback

CFRA analyst Angelo Zino described Nvidia’s recent dip as “reasonable” given its role as a driver of the AI rally. While selling pressure may persist, Zino believes that attractive valuations will eventually attract buyers back to the stock. CFRA remains confident in Nvidia’s long-term growth trajectory despite the recent pullback.

Nvidia shares closed 2% higher at $870.39 on Wednesday, reflecting an 80% gain since the beginning of 2024 and a more than threefold increase in value over the past year.

As analysts continue to express optimism about Nvidia’s position in the AI market, investors may find reassurance in the company’s resilience and growth potential amid industry challenges and market fluctuations.

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