All good things must come to an end. Or do they? That's a question many investors could be asking about Nvidia's (NVDA +1.73%) remarkable run.
Shares of the graphics processing unit (GPU) maker have skyrocketed more than ninefold since the fourth quarter of 2022. Nvidia is up almost 130% so far this year. However, the stock has plunged around 17% in recent weeks. Despite this big pullback, some Wall Street analysts think Nvidia is still a no-brainer buy.
NASDAQ: NVDA
Key Data Points
Full steam ahead
Four analysts have reiterated buy ratings for Nvidia since its shares began to retreat on July 10, 2024, according to LSEG. And they're even more optimistic about the stock than before Nvidia's pullback started.
On July 12, Benchmark analyst Cody Acree maintained his buy recommendation for Nvidia and raised its 12-month price target to $170 from $135. This higher target came after Benchmark hosted a fireside chat with Nvidia and investors. After this event, Acree said he had "increasing conviction" about Nvidia's continued leadership in the artificial intelligence (AI) chip market.
Three days later, TD Cowen analyst Matthew Ramsay reiterated a buy rating for Nvidia. Ramsay also raised the price target for the stock to $165 from $140. Ramsay believes that the demand for Nvidia's chips is sustainable and predicts another strong quarterly update from the company in August.
Two more votes of confidence in Nvidia came on July 22. Loop Capital's Ananda Baruah maintained a buy rating for the stock and raised the price target to $175 from $120. Piper Sandler's Harsh Kumar reiterated an overweight rating for Nvidia. Kumar increased his firm's price target for the stock to $140 from $120. He wrote to clients, "We see the strong business trends exhibited over the prior year by Nvidia set to continue, aided by the official launch of the Blackwell architecture in the October quarter."
Not everyone on Wall Street is as bullish about Nvidia
LSEG didn't report any downgrades for Nvidia since its recent pullback began. However, not all Wall Street firms are as bullish about the stock as Benchmark, TD Cowen, Loop Capital, and Piper Sandler.
Fifteen of the 38 analysts surveyed by LSEG in July rated Nvidia as a "hold." This group includes DeutscheBank's Ross Seymore, who said in May that it was "too late to buy" the stock. Two of the analysts surveyed by LSEG in July were even more pessimistic.
Why are so many analysts less enthusiastic about Nvidia? It's not that they don't think the company's GPU sales will continue to grow. Instead, the primary concern is that Nvidia's valuation already reflects this anticipated growth.
Is Nvidia stock still a no-brainer buy?
I don't think Nvidia is the no-brainer buy it once was. The euphoria surrounding the initial launch of generative AI models has died down somewhat. However, I believe the stock can and probably will move higher.
Benchmark's Acree is correct, in my view, that Nvidia will maintain its leadership in the AI chip market. I agree with TD Cowen's Ramsay that Nvidia will deliver another round of impressive results in its second-quarter update. I suspect Piper Sandler's Kumar is right that the company's launch of its Blackwell-based chips will provide a catalyst.
Blackwell could be a game changer for Nvidia. I'm not sure how much growth the new architecture will generate for the company, but I expect it to be significant. My take is that Nvidia's tremendous run hasn't come to an end. Instead, the stock is likely just taking a breather.
