Nvidia stock pops as Citi opens 90-day upside catalyst watch

Shares of Nvidia (NVDA) are trading higher on Monday after analysts at Citigroup (C) initiated a 90-day upside catalyst watch on the stock. Citi's analysts see the potential for positive supply chain commentary from chip factories and memory suppliers during the upcoming earnings season.

Yahoo Finance's Brad Smith and Seana Smith discuss the recent downward pressure on the stock.

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This post was written by Angel Smith

Video transcript

BRAD SMITH: Taking a look at shares of Nvidia this morning, the AI chip darling, ooh, up more than 2%, as Citi analysts open a 90-day upside catalyst watch on the stock. Citi sees possible supply chain commentary from chip factory and memory suppliers during earnings. And that specifically has a positive catalyst for the stock here.

This is, of course, massive as we've seen a little bit of profit taking start to emerge in Nvidia this year and early in the-- early innings of this year, rather. It still is a company that could very easily, by far, shoot beyond expectations that we've seen laid out on the Street here. I think the Street is just looking for more continued catalysts beyond what they've already seen in this earnings season will be.

And stop me if we've said this before. This earnings season will be critical for Nvidia to prove that it still has legs and growing out and capitalizing on even more demand. In the past, it's been talked about as the de facto AI play, and so just trying to cement that further from here.

SEANA SMITH: Yeah, exactly. And, Brad, this goes back to-- it reminds me of some of the conversations that we've had with analysts, that we've had with strategists surrounding Nvidia over the last several weeks because-- you're right-- we have seen a bit of an investment or a shift in sentiment when it comes to Nvidia. The stock had fallen just around 10% from its recent high there. So there was talk just about some of that downward pressure, what exactly that could look like then for Nvidia going forward.

But Citi at least coming out saying that they see a reason to buy. At least, for the short term, they are optimistic on the stock. Now, looking out, though, to the second half of 2024 this year, those year-over-year comps are going to get more and more difficult. And obviously, it's tough to continue to post growth numbers anything like Nvidia has posted over the last 12 to 18 months when you talk about those tougher comps.

And that's when we're going to get, I think, a little bit more of that discussion about what exactly the upside really looks like here for Nvidia. But Citi at least finding reason to be optimistic about Nvidia here in the short term. And then they also made a call-out on Intel as well, which also caught my eye because Intel has a stock that's also off nearly 30% year to date, but Citi actually seeing some upside here for Intel over the next 30 days.

And they're making the case that some of the selling action that they have seen-- that we have seen might be a bit overdone because a lot of that just due to fears surrounding its foundry business, what exactly the timeline looks like there in terms of how long it's going to take to really see an uptick here in sales going forward. So they're at least positive on Intel for the next 30 days and finding reason to buy.

BRAD SMITH: Yeah. And one of the huge kind of conversations that's continued to proliferate right now is nationalism among the chips sector, Intel, AMD most recently getting hit by that. We saw that a couple of days back. That is going to be interesting to see, how investors factor in the international equation. And that's where it places even more of the consideration around some of the foreign relations and international business policy that's going to become even more of a talking point as we get closer to November. Day by day, we're going to hear exactly where candidates line up on that. And that could have the potential to move some of these chip names even further here.