Nvidia Tops WSB Ranking Despite Turbulent Stock Performance

Nvidia ranks first in the latest WSB ranking, with no change from yesterday.

Recently, the global "AI chip titan" Nvidia's stock has been fiercely sold off, yet Goldman Sachs hasn't been deterred by this trend.

Last Tuesday, Nvidia's stock plunged 9.53%, with its market value evaporating by approximately $279 billion in a single day, setting a new record on the U.S. stock market. Nvidia's market value cumulatively diminished by around $400 billion last week.

Bespoke Investment Group data indicates that Nvidia was one of the key drivers behind the S&P 500 index experiencing its worst September start since 1953, although the index recouped some losses on Monday.

Despite the sell-off in Nvidia stocks, Goldman's chief analyst Toshiya Hari maintains a buy rating on this chip giant.

On Monday, at the Goldman Sachs 2024 Communications and Technology Conference, when asked if the Goldman team believed Nvidia's stock was oversold, Hari responded, "Yes, we believe it is."

"Nvidia's recent performance hasn't been great, but we remain optimistic about the stock," remarked Hari. "First, the demand for accelerated computing remains very strong. We tend to spend a lot of time on large-scale enterprises such as Amazon, Google, and Microsoft, but you will see that the demand scope is expanding to enterprises and even sovereign states."

The sell-off wave for Nvidia began post its Q2 fiscal 2025 report release on August 28. Although the earnings exceeded expectations, it still wasn't good enough for Wall Street. While Nvidia's revenue surpassed Wall Street's forecast by 4.1%, its profit margin hit its lowest since the fourth quarter of fiscal 2023.

One major debate surrounding Nvidia is the sustainability of its profit momentum.

Goldman's equity research team noted in a recent report that since early 2023, investors' sentiment on artificial intelligence has "almost done a 180-degree turn." Investors' patience is wearing thin, and they want to see, rather than be told, about AI-driven revenue streams and margin improvements.

Nonetheless, Goldman emphasized that judging profound technological changes like artificial intelligence based on short-term cost and return economics is futile. The focus should be long-term. Goldman estimates that generative AI will start making substantial contributions to industry growth by the second half of 2025.

When discussing Nvidia, Hari said, "Their competitive position remains very solid. We indeed think that in the commercial chip sector, Nvidia is the top choice, even compared to custom chips, they have an advantage in innovation speed."

Besides not meeting Wall Street's highest expectations, issues with the anticipated Blackwell chip deliveries, recent antitrust review rumors, investor caution towards AI investment, and increased market volatility are all factors contributing to Nvidia's stock plunge this round.

Bank of America recently stated that the sharp drop in Nvidia's stock over the past week provides an attractive buying opportunity.

After plunging 14% last week, Nvidia's stock rebounded sharply by 3.5% on Monday, boosting the tech-dominated Nasdaq. This year, Nvidia's cumulative stock gain remains at 121%.