NVDA Stock Rebounds In Premarket After Worst Drop In 10 Months; Analysts, Retail Investors Remain Optimistic

• Several analysts, including JPMorgan and BofA, raised their price targets on the stock; their average target implies an over 40% upside.
• Nvidia’s fundamental strength persists despite sustainability concerns, said Deutsche Bank analysts. "AI is not in a bubble," Truist said
• Stocktwits sentiment for NVDA holds in the ‘extremely bullish’ zone.

Nvidia shares edged higher, rising 0.8% in the premarket session on Friday, amid a string of positive commentary and price target hikes from analysts. 

Shares fell 5.6% on Thursday, its steepest drop in 10 months, despite upbeat results from the chipmaker, as investors signaled that Nvidia’s growth wasn’t enough to justify its lofty valuation amid intensifying talk of an AI bubble.

Tech stocks across the board have been under pressure over the last few weeks, with NVDA now in the red (down 0.9%) for the new year.

Analysts Push Back On ‘AI Bubble’ Narrative

Several analysts nevertheless raised their price targets, noting that fears of an AI bubble may be overstated and that Nvidia’s business, along with demand for AI chips and applications, remains robust.

Nvidia’s fundamental strength persists despite sustainability concerns, Deutsche Bank said in an investor note. The research firm raised its price target to $220 from $215 while maintaining a ‘Hold’ rating. 

"AI is not in a bubble" and that the AI total addressable market CAGR is "realistically 50%," Truist analysts said in their note. They said Nvidia’s growth accelerating despite component shortages is a hearty signal. Trusit raised its price target to $300 from $220.

JPMorgan, Morgan Stanley, and Bank of America, among others, raised their Nvidia stock targets from the earnings report. Morgan Stanley separately flagged cash flow pressure at hyperscalers (Nvidia’s customers), raising questions about the sustainability of their committed spending.

Currently, 56 of 61 analysts recommend ‘Buy’ or higher on Nvidia stock, two rate it ‘Hold’, and a lone analyst rates it ‘Sell,’ according to Koyfin. Their average price target of 262.29 implies an upside of 42% from the stock’s last close.

Retail sentiment flipped from ‘bearish’ to ‘extremely bullish’ after Wednesday's report and has held up in the territory. Many said they believe the stock’s drop on Thursday was a “distortion” and an opportunity to load up shares.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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