Nvidia Dips After Earnings. The Stock Is a ‘Must-Have’ Even With China Concerns.

Those rapid recent stock advances are one reason for stock traders to be cautious as artificial intelligence has been a major driver of technology stock gains this year. Another is concern that restrictions on chip exports to China, one of
Nvidia’s
biggest markets, will get worse before they get better. The U.S. government is trying to prevent the highest-spec units from getting to China if they might be used for military purposes.

“Investors are pausing to digest the impact of tightening export controls to China,” said Derren Nathan, head of equity research at Hargreaves Lansdown. “For now, that’s being more than compensated for by booming demand elsewhere, but there are concerns there will be more restrictions to follow.”

After Tuesday’s earnings report, analysts at KeyBanc led by John Vinh kept their Overweight rating on
Nvidia,
with a price target of $650. “We’re encouraged by these strong results and view Nvidia as best positioned to monetize Gen AI,” they wrote in a research note.

Piper Sandler
strategists also maintained their Overweight rating on the stock. Their price target is $620. “Results and guidance for the October and January quarters were well above Street expectations,” said Harsh V. Kumar and Robert Aguanno in a note. “Importantly, management called out implications from lost sales due to China restrictions are expected to be minimal.”

Itau BBA raised its price target after the earnings to $640 from $600. Nvidia “is a must-have stock from global portfolios, particularly those focused on tech,” said analysts led by Thiago Alves Kapulskis.

“Even without any revenue from the second largest country in the world (in terms of both GDP and AI demand), Nvidia was still able to issue very strong guidance. This is strong evidence that demand is resilient,” the Itau analysts said.

Write to Brian Swint at [email protected]