Shares of Nvidia (NVDA) are bouncing back after dropping for three straight sessions. While some on Wall Street believe the dip is “overblown”, could it be time to get out of chip stock before any more uncertainty persists?
Neuberger Berman Senior Research Analyst Daniel Flax joins Catalysts to give insight into Nvidia’s recent performance and what investors need to consider when keeping Nvidia in their portfolios.
Flax expounds upon what he takes into consideration for tech companies: “There are a number of factors when we model the company, we go through each one of their businesses. The most important one is the data center business, where you’re seeing very, very strong demand for their systems. Also on the networking side, growth is very, very healthy there as well. And so you’re trying to balance healthy demand with, of course, supply, which is constrained. Now I expect the supply chain and Nvidia and its partners to continue to make progress on improving supply over the next several quarters, but that is a gating factor…”
For more expert insight and the latest market action, click here to watch this full episode of Catalysts.
This post was written by Nicholas Jacobino
Video Transcript
On NVIDIA.
It’s actually moving higher this morning, gaining about 3.5% recouping some of the losses that we’ve seen over the prior couple of trading days.
The stock actually falling 7% yesterday, 13% overall from when after briefly became the world’s most valuable company earlier, uh, last week.
So for more on this and where we had from here, we want to bring in Dan Flack, Burger Berman, senior research analyst.
Dan.
It’s great to talk to you.
So when you take a look at some of the price action that we’ve seen surrounding NVIDIA, lots of questions about whether or not maybe this is a start of some unravelling when it comes to the A I trade.
But here we are today, looking at gains 40 minutes into the trading day.
What does that signal to you?
Good morning.
I think the media remains attractive with a 12 to 24 month horizon.
Clearly in the near term, I would expect the stock to remain volatile.
The key longer term, though, is really this continued execution on their product cycles.
You saw that with Hopper in the Data centre, Blackwell announcing Ruben for 2026.
And so this this execution on the product road map is really foundational to driving growth over the next couple of years, and the other important piece of the equation is really a vibrant ecosystem.
They continue to attract developers who want to write and invest in the NVIDIA platform, and so we continue to like the name but again do expect it to remain volatile in the near term.
So if you’re expecting it to be volatile in the near term, what kind of math and models should analysts investors be looking at to suss out the degree of in video success heading into the next quarterly earnings print here?
Because I think there is a lot of confusion from the street about how to run the numbers on a company that is growing so quickly.
There are a number of factors when we model the company, we go through each one of their businesses.
The most important one is the data centre business, where you’re seeing very, very strong demand for their for their systems.
Also on the networking side, growth is very, very healthy there as well, and so you’re trying to balance healthy demand with, of course, supply, which is constrained now the supply chain NVIDIA and its partners to continue to make progress on improving supply over the next several quarters.
But that is a gating factor when thinking about the July quarter results, which will get announced later in August.
But the key is if they’re able to continue to execute on the product road map, I think estimates will move higher over the next 12 to to 18 months, and that can help support the stock and drive out performance.
Dan.
What does it tell you?
Does it tell you anything?
Just about that broader A. I trades and the excitement euphoria that has certainly swept the markets here over the last couple of quarters Has that narrative changed at all?
Clearly, there’s still reason, obviously, to be excited.
But in terms of the leadership and who exactly is positioned best has that at all changed?
The environment remains very fluid, but what we focus on is companies that have distinct intellectual property, ability to execute on product road maps and really, the ability to invest throughout what, of course, remains a very, very difficult period.
NVIDIA, I think, remains very well positioned in the data centre in the mobile market.
Think about all the devices cars, smartphones, of course, factories, all of these different environments.
They require low power solutions.
So a company like Qualcomm is an example is incredibly well positioned in terms of its intellectual property and product road maps.
I think Apple has a very important role to play We saw recently Apple Intelligence.
I think they are setting up for an attractive product cycle ramp with iPhone 16 and iPhone 17, Microsoft in the Data centre as well as Amazon Web services.
Google Cloud.
These platforms are really about empowering other companies and individuals to be successful, and that’s what we’re focused on when we look for growth opportunities.
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