Why Nvidia Stock Is Jumping Today
Nvidia's stock rose 2.4% on Tuesday, recovering from a 4.8% drop on Monday due to macroeconomic concerns and a potential chip delay. The broader market also rebounded, with the S&P 500 up 2.6%. Analysts from Barclays and Bank of America lowered their price targets for Nvidia to $155 and $150, respectively, but maintained buy ratings, suggesting over 50% upside potential. The market's recovery is attributed to optimism regarding trade tensions and the impact of recent analyst reports.
Nvidia (NVDA 2.34%) stock is moving higher on Tuesday as the broader market rebounds from Monday's declines. The GPU leader's share price was up by 2.4% as of 12:48 p.m. ET. At the same point in the day, the S&P 500 was up 2.6%, and the Nasdaq Composite had risen 3%. Nvidia stock had been up as much as 3% earlier in the session.
Stocks sold off Monday after President Donald Trump intensified his criticism of Federal Reserve Chair Jerome Powell and the central bank's interest rate policy, but the market is recovering some of that lost ground, apparently in response to some optimism out of Washington on the trade war front. In addition to the broader market's momentum, Nvidia stock is likely also benefiting from new analyst reports that were published Tuesday morning.
The S&P 500 fell 2.4% Monday, and the Nasdaq Composite index fell 2.6%. In addition to the widespread sell-offs driven by macroeconomic concerns, Nvidia stock also lost ground after a report was published stating that one of its upcoming chips could be delayed due to undisclosed flaws. The artificial intelligence (AI) hardware leader's share price fell roughly 4.8% in Monday's trading, but it's seeing a recovery Tuesday as major indexes move higher.
Analysts cut their price targets on Nvidia
Before the market opened Tuesday morning, Barclays published new coverage on Nvidia. Tom O'Malley, the firm's lead analyst on the stock, lowered his one-year price target from $175 per share to $155 per share in response to tariff and trade-war pressures. On the other hand, O'Malley reiterated his overweight rating on the stock, which is equivalent to a buy rating.
Bank of America also lowered its price target on Nvidia stock from $160 per share to $150 per share. Despite that cut, the bank thinks that the impact of the U.S. effectively banning the export of Nvidia's H20 AI processor to China has already been largely baked into the stock, and that the business will still post earnings per share of $3.97 in this fiscal year and $5.74 next fiscal year. The bank reiterated its buy rating on Nvidia.
While Barclays and Bank of America both lowered their near-term valuation forecasts on the chipmaker, both of their new targets still imply upside of more than 50% from its share current price. However, investors should keep in mind that macroeconomic and geopolitical dynamics are shifting rapidly these days. For better or worse, the factors that underpin analysts' price targets could change in short order.