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Investors’ insatiable appetite for all things Nvidia (NVDA) may have cooled a bit recently, but the chill is temporary and the holiday itself is just beginning, according to one Wall Street semiconductor analyst.
“I think some of these (issues) represent growing pains,” Bank of America analyst Vivek Arya told Yahoo Finance executive editor. Brian Susie During an episode of Yahoo Finance’s Opening Bid podcast (video above, listen below).
Shares of Market Habibi and the Dow Jones Industrial Average fell 8.5% in the past month. The Dow Jones fell modestly last month, while the S&P 500 gained 0.5%.
“Look at any of these great big stocks whatever they are,” Arya added. “Every single one of them has had this moment of soul-searching periodically.
The soul searching for Nvidia stock, according to Arya, is tied to several factors, including execution issues while trying to push through groundbreaking innovation and concerns about exposure to China ahead of potential tariffs from a returning President Trump.
“Some of these forces are company-specific, some are market forces,” Arya said of the issues.
Arya explained that the switch to Nvidia’s Blackwell AI chip has not been smooth, which has bulls concerned.
“The last two quarters have not been clean because they are going through growing pains from one generation of product to a new generation,” Arya said.
Read more: Why Nvidia’s Blackwell won the 2024 Yahoo Finance Product of the Year award
Blackwell, which was introduced in March at the company’s annual GPU conference, has been hailed as Nvidia’s most powerful and innovative offering. But presenting the completed idea in product form to the masses proved more difficult.
“Since last March, what we’ve seen are implementation issues that keep it out of customers’ hands,” he said.
Nvidia’s issues with mask and system-level configurations may be resolved, but “we now have a two-quarter period where it’s completely inappropriate for Nvidia to have these question marks and where estimates haven’t gone up the way they were supposed to go up.” Arya.
However, there are plenty of positives for Nvidia stock in the long term, Arya says. Wall Street may more broadly agree — Yahoo Finance data shows that 94% of sell-side analysts rate Nvidia shares a buy or strong buy.
All eyes remain on the company as it takes bigger steps toward unleashing Blackwell on a market hungry for its offerings. Arya believes Blackwell will generate billions in sales in 2025. The stock could also see a near-term catalyst as Nvidia founder and CEO Jensen Huang takes the stage as a keynote speaker at CES 2025.
From there, “some of the gross margin issues will start to resolve by the time the product ships for a quarter or two,” Arya said. Once they expand, “they’re able to absorb a lot of those initial costs.”
When Blackwell is released, it is also expected to leverage generative AI to help us move to the next generation, “which can be more easily monetized,” said Arya, who cautioned against thinking Nvidia is at its peak now.
“It’s like saying the Apple App Store didn’t work even before the App Store was available on the phone,” he said.
Three times a week, Yahoo Finance’s executive editor Brian Susie Insightful conversation areas and chats with the biggest names in business and markets Open the bid. You can find more episodes on our website Video center Or watch in private Favorite streaming service.
Grace Williams Writer at Yahoo Finance.
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