According to a Wall Street Semiconductor Analyst, investor greed for everything related to NVIDIA may have slightly cooled recently, but the chill is temporary and the feast itself has just begun.
Bank of America Analyst Vivek Arya pointed out, "I think some of these [issues] are growing pains."
In the past month, the Dow Jones Industrial Average has dropped by 5.72%. The Dow Jones Index has slightly declined in the past month, while the S&P 500 Index has risen by 0.5%.
Arya added, "Look at any of these large stocks. They all regularly go through these soul-searching moments."
Arya stated that this soul-searching for NVIDIA Stocks is related to several factors, including execution issues while attempting to push for leading innovations, and concerns about exposure to China before the potential tariffs return with President Trump.
"Some of these are company-specific strengths," Arya said when discussing these issues, "and some of these are market forces."
Arya explained that NVIDIA's touted AI chip Blackwell is not going smoothly, which has left the market feeling uneasy.
Arya said, "The past two quarters have not been quiet, as they are experiencing the growing pains of transitioning from one generation of products to the next."
Blackwell was launched at the company's annual GPU conference in March, hailed as NVIDIA's most powerful and innovative product. However, it has proven to be more difficult to bring completed ideas to the public in product form.
He said, "Since [March], what we've seen are execution issues, taking it away from the hands of customers."
Arya mentioned that NVIDIA's issues with masks and system-level configurations might be resolved, but "right now we have two quarters where having these issues with NVIDIA is very different, estimated not to have risen as they should have."
Arya believes that nevertheless, NVIDIA's stocks still have a lot of positive aspects in the long run. The broader Wall Street agrees—Yahoo Finance shows that 94% of sell-side analysts rate NVIDIA's stocks as Buy or Strong Buy.
All eyes are on the company as it makes greater strides in releasing Blackwell to a market eager for its products. Arya believes Blackwell will achieve billions of dollars in sales by 2025. The stock may also see catalysts in the short-term when NVIDIA founder and CEO Jensen Huang takes the stage as a keynote speaker at CES 2025.
Arya stated that from there, "some of these gross margin issues will start to resolve as product shipments begin over the next one or two quarters." Once they scale up, "they will be able to absorb significant upfront costs."
Arya stated that when Blackwell is launched, it is also expected to promote generative AI to help us enter the next generation, "easier to monetize," he warned not to think that NVIDIA is currently at its peak.
He said, "It's like saying that the Apple App Store could not work even before the advent of smartphones."
