TLDR
- Nvidia stock fell over 5% to $166.95 on Tuesday despite Wall Street confidence in AI trends ahead of tech earnings season
- Taiwan Semiconductor Manufacturing confirmed AI growth remains strong with no changes in customer behavior for second half of year
- NewStreet Research predicts top four AI chip makers will beat Wall Street revenue consensus by 7% next year
- Nvidia received approval to resume selling AI chips to China, unlocking a $50 billion annual market opportunity
- Top investor Stone Fox Capital calls NVDA “still cheap” at 30x forward 2027 earnings, rating it a Strong Buy
Shares of Nvidia dropped over 5% to $164 on Tuesday. The decline came as broader chip stocks faced pressure across the market.
Advanced Micro Devices dropped 3.5% while Broadcom fell 3.6%. Monday had already seen Nvidia shares decline 0.6%.
The weakness comes ahead of a crucial earnings season for technology companies. Alphabet kicks off tech earnings on Wednesday, setting the tone for AI-related stocks.
Tech Earnings Season Brings High Expectations
UBS Global Wealth Management expects healthy results from tech companies this earnings cycle. Chief investment officer Mark Haefele projects 12% profit growth from global tech in 2025.
The firm maintains a bullish long-term view on artificial intelligence trends. Strong capital spending is expected to support this growth trajectory.
Taiwan Semiconductor Manufacturing provided encouraging commentary last week. Management confirmed the AI secular growth trend remains robust with no behavioral changes from customers.
TSMC serves as Nvidia’s primary semiconductor manufacturing partner. The company’s outlook directly impacts Nvidia’s production capabilities.
NewStreet Research analyst Pierre Ferragu sees strong momentum building for 2026. He predicts the top four AI chip makers will exceed current Wall Street revenue estimates by 7%.
Ferragu notes that demand appears to be outpacing purchase plans. This dynamic mirrors the underestimated growth pattern seen in 2025.
China Market Reopens for Nvidia
A major catalyst emerged for Nvidia with approval to resume AI chip sales to China. The company can now sell older AI GPU chips to Chinese customers.
This reversal unlocks access to a $50 billion annual market opportunity. The previous sales block had been a headwind for the company’s growth prospects.
Top investor Stone Fox Capital sees this as a game-changer for upcoming quarters. The 5-star rated analyst expects “monster quarters” ahead with Chinese sales resuming.
Stone Fox believes Q2 sales wrapped up before the major H20 wins materialized. The impact will likely show up in Q3 and Q4 revenue guidance.
The analyst projects quarterly sales could push far above current consensus estimates. China’s total addressable market makes the opportunity particularly attractive.
OpenAI announced a partnership with Oracle on Tuesday for AI data center development. The agreement covers more than five gigawatts of capacity containing over two million chips.
While processor types weren’t disclosed, OpenAI relies heavily on Nvidia graphics processing units. This partnership represents continued demand for AI infrastructure.
Nvidia became the first company to close above $4 trillion market capitalization this month. U.S. companies remain the primary revenue driver despite the China opportunity.
Stone Fox Capital rates the stock a Strong Buy despite recent gains. The analyst argues NVDA remains attractively valued at 30x forward 2027 earnings.
Wall Street consensus supports this bullish view with 34 Buy ratings versus 3 Holds and 1 Sell. The average 12-month price target of $182.49 suggests 9% upside potential.
Nvidia’s first quarter fiscal 2026 results showed revenues of $44.1 billion, up 69% year-over-year. The company absorbed a $4.5 billion charge from previous H20 export restrictions to China.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
