BofA names Nvidia top 'rebound' stock in 2024 chip comeback

Nvidia (NVDA) stock is trading higher following a positive assessment from Bank of America analyst Vivek Arya. Arya has identified the semiconductor giant as a top "rebound" stock pick for 2024 despite investor concerns about the company's ability to see significant returns on its heavy investments in artificial intelligence.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Angel Smith

Video transcript

On Yahoo Finance first up NVIDIA, the chip giant moving higher today after Bank of America analyst Vivek Araya called it a top rebound stock pick.

Investors have been worried about whether A I will deliver the necessary return on heavy investment spending.

And Araya saying those concerns are valid but premature and inconclusive.

So Julie another round of analysts getting in on the NVIDIA chatter, we know the stock is off almost 20% over the last month.

Now sort of depends on where you picked the month, but NVIDIA and chips have not had a good month in this draw down.

It feels like over the last week, there's been a pretty wide and loud audience of people saying they think this is a buyable dip for NVIDIA.

I think the Bank of America note that I was just mentioning off the top there.

What stuck out to me was sort of the team highlighting again, this is a cyclical business and normally the cycle lasts longer than four quarters.

The uptrend that we've had in chips stocks has really only been four quarters, it's normally closer to eight or 10.

So when you think about the cycle as a whole, it's still early in theory and then you can get into some seasonality, things with chip stocks.

And normally this isn't that great time of year.

And so they're sort of making the case by Q four.

Maybe we start to see the stock battle back.

Yeah.

Are you says that um, the stock, not just Invidia, but chips generally don't have a good August don't necessarily have a good September.

Then things start to turn around October.

So that's kind of the time frame that they're looking at.

They like NVIDIA in particular.

Um And the top for NVIDIA was June 18th, which was actually the high for a lot of those um semiconductor stocks.

It is down since then, about 90% it's still up 100 and 20% year to date.

So just to put that in perspective here, but um he Bank of America doesn't just like NVIDIA, they like um Broadcom, they like KL A 10 core as well.

Um They look at some of the other companies that tend to go up, you know, at this point in time when the, when the socks, when the Philadelphia semiconductor index has sold off, um they look again at Broadcom synopsis is another one that they like.

So they have like a whole basket of these stocks that they are looking at to benefit the most from the rebound right now.

And I think the thing that stands out in this in video conversation too that I keep seeing is yes, price is coming down a lot for NVIDIA.

What is not falling as much as earnings estimates.

And so if you wanted to call the stock expensive before, which wasn't really anyone's favorite take on the street, I don't think because it really wasn't overly, overly expensive, but that's getting more and more attractive as prices come down.

And it was interesting to see U Bs was highlighting this in their note today, essentially, maybe we're priced correctly for 2025 earnings.

But the U Bs team was highlighting they think were priced for, uh NVIDIA earnings to peak in 2025.

And they don't think that's, they think they think NVIDIA earnings peak in 2026.

So if NVIDIA earnings peak in 2026 and we still keep seeing these massive earnings growth, massive beat in raises through the next year, then maybe the stock should actually be priced higher and that's how you end up with 100 and $50 price target group.

We're gonna learn a lot more on August 28th or maybe we won't.

And we're gonna have a lot more of these conversations between now and August, which still two weeks to, I'm looking forward to it.