Nvidia's Stock Recovered and Could Rally Another 30%, According to Analysts

Shares of Nvidia Corp. rebounded as investors shrugged off the fears that triggered a significant selloff in megacap technology companies the day before.

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Benchmark analyst Cody Acree capitalized on the moment with a timely note to clients regarding a "fireside chat" he hosted earlier this week between Nvidia and investors. His insights might have gone unnoticed if released a day earlier amidst the market chaos.

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Acree left the discussion with stronger confidence in Nvidia's continued dominance in the artificial intelligence industry. He anticipates that both the company’s earnings and revenue will surpass expectations in the foreseeable future.

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“Notably, the company maintains a strong belief that its planned customer demand consistently exceeds its growing supply capabilities. Their growth outlook remains unaffected by customers' increasing internal silicon efforts, and both systems are expected to fit within expanding customer budgets,” Acree explained.

Nvidia’s stock (NVDA) surged 3.4% in the afternoon, recovering from a 5.6% drop on Thursday that erased $183.4 billion from its market value, according to FactSet data. This previous decline was part of a broader selloff among the so-called Magnificent Seven tech stocks, which collectively lost $598 billion in market value.

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Acree reaffirmed his buy rating on Nvidia's stock, a stance he has maintained for at least three years. He also increased his price target to $170 from $135, suggesting a 29.1% potential upside from current levels.

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Regarding Nvidia’s new Blackwell chip, Acree noted that it is already in full production, with initial revenue expected in the fiscal third quarter, which ends in October. Nvidia is slated to report second-quarter results in mid-August.

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Addressing concerns that the Blackwell launch might lead to an "inventory digestion period" affecting demand growth, Acree highlighted Nvidia’s assertion of "aggressive adoption expectations" for new systems through at least next year, based on long-term planning with customers.

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With Friday’s recovery, Nvidia’s stock was just 2.9% below its record close of $135.58 on June 18. Year-to-date, the stock has skyrocketed 165.9%, while the PHLX Semiconductor Index (SOX) has climbed 40.3% and the S&P 500 (SPX) has risen 18.4%.

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From a technical perspective, there might be concerns that Thursday’s significant drop occurred just three weeks after another sharp pullback from the record close. After reaching an intraday high on June 20, the stock reversed course, closing down 3.5%. It continued to fall over the next two days, including a 6.7% drop on June 24.

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This marked the first time within a month that Nvidia's stock experienced two single-day drops of more than 5% since it fell 7% on December 22, 2022, and 7.1% on December 27, 2022. However, any technical worries could be alleviated with another record close for the stock.

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