Nvidia stock (NVDA) closed Friday with a weekly loss of 2% as investors continue to sort out what has been a challenging past few weeks for the hottest trade of the year.
But Wall Street analysts this week remained bullish on the long-term prospects for Nvidia, which is now down 20% in the past month and more than 25% from its record closing high.
Earlier this week, analysts at Piper Sandler called a “great opportunity” to buy Nvidia, AMD ( AMD ) and ON Semiconductor ( ON ) after recent sector sales.
Some analysts also took the opportunity to upgrade the stock during this sale.
“I think for 2025 … things are pretty much set up,” New Street Research technology analyst Antoine Chkaiban told Yahoo Finance on Thursday. “We know exactly how much it is [hyperscalers] expect to grow capex. Plans are already set.” New Street upgraded Nvidia to Buy this week with a price target of $120.
On Friday, chip maker TSMC (TSM), a supplier to Nvidia, posted a 45% year-on-year increase in sales in July – a sign that AI demand is still strong.
“We’re seeing faster demand across the board, and that’s reducing the risk of supply pauses as customers wait for the next generation of chips to become available in bulk,” Chkaiban said.
The so-called hyperscalers — Microsoft ( MSFT ), Meta ( META ), Amazon ( AMZN ), and Alphabet ( GOOG , GOOGL ) — each held steady during earnings reports. the latest in their commitment to AI funding. And most of these investments are flowing right into Nvidia.
“Consumers may be looking again at AI-based brands because they are in [semiconductors] remains the single most profitable space in terms of consumer spending as evidenced by the rise of many hyperscalers this earnings season,” analyst Jeffery Blayne Curtis told Yahoo Finance on Friday.
Talk of a possible delay for Nvidia’s next-generation Blackwell chip put additional pressure on the stock earlier this week. A two-month wait for chips wouldn’t be trivial, analysts say, but it still won’t be enough to move the needle on Wall Street expectations.
The Curtis group said in a recent letter that Nvidia’s delay “is true, but it is not a change of thesis.” The company is set to report quarterly results at the end of August.
Analysts and strategists looking at the broader markets also see the recent boom in business AI as an opportunity.
Truist Advisory chief investment officer Keith Lerner upgraded the technology sector to overweight on Thursday after it fell 12% from its mid-July peak and semiconductors fell nearly 20% . Lerner noted that despite the decline in the price of these products, the estimates of the income of the technology are increasing.
“This suggests that the recent volatility has been driven by demographics rather than fundamental changes,” Lerner wrote in a note to clients.
“Furthermore, in a cooling economic environment, we expect investors to return to technology due to some of the global trends caused by artificial intelligence (AI) and its early growth opportunities. Moreover , in the current earnings period, we have seen spending trends in AI continue to increase.”
But the recent changes in opinion do not really solve the next question, which investors will want to answer in time – how do these big investments in AI end up paying off?
“When it comes to the technology, what is most visible is not only the picture of the big economy but also the fact that people want to see … proof that business GenAI is really driving positive results,” Luke Barrs, CEO of Goldman Sachs Asset Management. , told Yahoo Finance on Friday.
“We have to be careful and let it play out over the next year or two.”
Ines Ferre is a senior business reporter for Yahoo Finance. Follow him at X to @ines_ferre.
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