Nvidia shares post weekly losses as Wall Street sees ‘urgent demand’ keeping chip deal intact

Shares of Nvidia ( NVDA ) closed Friday with a weekly loss of 2% as investors continue to sort out what has been a challenge over the past few weeks for the hottest trade of the year.

But Wall Street analysts this week remained bullish on the long-term outlook for Nvidia, which is now down about 20 percent in the past month and down more than 25 percent from its highest close.

Earlier this week, analysts at Piper Sandler declared a “tremendous opportunity” to buy Nvidia, AMD ( AMD ) and ON Semiconductor ( ON ) following the sector’s recent selloff.

Some analysts also took the opportunity to upgrade the stock during this selloff.

“I think for 2025 … things are pretty well set,” New Street Research technology infrastructure analyst Antoine Chkaiban told Yahoo Finance on Thursday. “We know roughly how much (hyperscalers) expect investment to grow. The plans are already set.” New Street upgraded Nvidia to a Buy this week with a price target of $120.

On Friday, chipmaker TSMC ( TSM ), a supplier to Nvidia, reported a 45 percent year-over-year sales increase in July — a sign that demand for AI remains strong.

“We still feel urgent demand overall, and this mitigates the risk of a supply hiatus while customers wait for the next generation of chips to be available in volumes,” Chkaiban said.

The so-called hyperscalers — Microsoft ( MSFT ), Meta ( META ), Amazon ( AMZN ) and Alphabet ( GOOG , GOOGL ) — each remained consistent during recent earnings reports in their commitment to AI investments. And much of that investment is coming directly to Nvidia.

“Investors will likely revisit AI-based names as (conductors) remains the only area where spending is flowing in terms of customer spending, as evidenced by capital raises by several hyperscalers during this earnings period” , Jefferies analyst Blayne Curtis told Yahoo Finance. 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 the tokens wouldn’t be inconsequential, analysts say, but it still wouldn’t be enough to move the needle on Wall Street expectations.

Curtis’ team said in a recent note that Nvidia’s delays “are real, but not a game-changer.” The company is due to report quarterly results at the end of August.

Analysts and strategists looking at the markets more broadly also see the recent cooling in AI trading as an opportunity.

Truist Advisory Chief Marketing Strategist Keith Lerner upgraded the tech sector to overweight on Thursday after a 12% drop from its mid-July peak, with semiconductors down nearly 20%. Lerner noted that despite the decline in the price of these stocks, estimates of the technology’s anticipated earnings continue to rise.

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“This suggests that the recent failure was due more to crowded positioning than a change in fundamentals,” Lerner wrote in a note to clients.

“Furthermore, in a cold economic environment, we expect investors to return to technology given some of the secular headwinds arising from artificial intelligence (AI) and its premium growth prospects. Additionally, during the current earnings season, we have seen capital spending trends toward AI continue to increase.”

But recent shifts in sentiment don’t necessarily resolve the looming question investors will want to answer over time — how will these massive investments in AI pay off?

“When it comes to technology, what’s very evident is not just the macroeconomic picture, but also the fact that people want to see … proof that GenAI trading is actually having positive results,” Luke Barrs, managing director at Goldman Sachs Asset Management . , Yahoo Finance said Friday.

“We have to be cautious and let everything play out over the next year or two.”

Ines Ferre is a senior business reporter for Yahoo Finance. Follow X at @ines_ferre.

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