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Investors' voracious appetite for all things Nvidia (NVDA) may have cool a little recently, but the cold is temporary and the feast itself has only just begun, according to one Wall Street semiconductor analyst.
“I think some of these (issues) are growing pains,” a Bank of America analyst Vivek Arya said the Executive Editor of Yahoo Finance Brian Sozzi during an episode of Yahoo Finance Opening Offer podcast (video above, listen below).
The market's darling shares and the Dow Jones Industrial Average component are down 8.5% in the past month. The Dow is down modestly in the past month, while the S&P 500 has tacked on a 0.5% gain.
Arya added, “Look at any of these great big stocks. All of them have gone through this soulful moment from time to time.”
That soul searching for Nvidia stock, according to Arya, is tied to several factors, including operational issues while trying to push through leading innovation and concerns about China's exposure in front of possible tariffs from the returning president Trump.
“Some of these are company-specific forces,” Arya said of the issues, “and some of these are market forces.”
The transition to Nvidia's Blackwell touchable AI chip hasn't been seamless, Arya explained, which has unnerved the bulls.
“The last two quarters have not been clean because they are going through the 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, introduced in March at the company's annual GPU conference, was dubbed Nvidia's most powerful and innovative offering. But bringing the finished idea in product form to the masses has proven more difficult.
“Since (March), what we've seen is execution issues keeping it out of customers' hands,” he said.
Nvidia's problems with mask and system configurations may be resolved, but “we now have a period of two quarters where it is very different for Nvidia to have these question marks and where the estimates have not raised the way they were meant to be,” he said. Arya.
Still, there's plenty of upside to Nvidia stock in the long term, argues Arya. Wall Street more broadly would agree — Yahoo Finance data shows 94% of sell-side analysts rate Nvidia stock as Buy or Strong Buy.
All eyes remain on the company as it makes more moves towards releasing Blackwell to a market hungry for its offerings. Arya believes Blackwell will rack up billions in sales in 2025. The stock could also see a near-term catalyst like the founder and CEO of Nvidia Jensen Huang take the stage as a keynote speaker at CES 2025.
