Nvidia Stock – Bernstein Analyst Stacy Rasgon Endorses Nvidia and Broadcom Despite Semiconductor Sector Dip

Nvidia Stock – Bernstein continues to endorse Nvidia and Broadcom as leading semiconductor investments, even though the sector has recently lost much of its year-to-date outperformance compared to the S&P 500. According to Bernstein analyst Stacy Rasgon, semiconductor stocks are only slightly ahead of the S&P 500 this year, as “some of the air has leaked out of the sector recently.”

Semiconductor Sector’s Recent Performance

As of the latest update, the PHLX Semiconductor Index (SOX) is just 120 basis points ahead of the S&P 500, compared to a 2,000 basis points outperformance three months ago. The S&P 500 had even been outperforming the PHLX Semiconductor Index earlier this week, though a significant surge in chip stocks on Wednesday improved the outlook. Rasgon attributes the recent slowdown to a temporary cooling in AI sentiment, while non-AI segments like automotive and industrial chips are still grappling with their recovery trajectories.

Nvidia: A Strong Investment Despite Concerns

Rasgon highlights Nvidia Corp. (NVDA) as a top semiconductor pick, despite concerns about sustainability and potential delays in the Blackwell chip lineup. According to Rasgon, worries about Blackwell delays have proven to be mostly unfounded, with Nvidia poised for substantial revenue from its new chips in the upcoming fiscal fourth quarter and a likely significant ramp next year.

Nvidia’s Hopper lineup continues to see robust demand, with supply constraints easing. Rasgon dismisses margin concerns, suggesting that fiscal fourth-quarter margins could range from 73% to 74%, with potential for improvement as Blackwell costs are optimized and pricing stabilizes. Nvidia’s stock has risen 1.8% in morning trading on Thursday, following an 8% surge the previous day.

Broadcom: Navigating Pressure with Promising AI Momentum

Broadcom Inc. (AVGO) is also among Rasgon’s top picks. Despite facing pressure in its core semiconductor business, Broadcom is showing strong momentum in the artificial intelligence sector. Rasgon is optimistic about Broadcom’s prospects, noting that the core business might improve next year and the VMware deal is significantly exceeding expectations. Broadcom’s stock has increased 5% in Thursday morning trading.

Qualcomm: Navigating Challenges and Risks

Rasgon also recommends Qualcomm Inc. (QCOM), highlighting the end of a challenging smartphone cycle and the company’s efforts to mitigate risks for the December quarter. However, investors should be aware of potential risks related to Apple Inc. (AAPL) potentially shifting more business away from Qualcomm, which may impact the company’s outlook. Qualcomm shares are down 0.9% early in Thursday’s trading.

Conclusion

Bernstein’s recommendations emphasize that Nvidia and Broadcom remain strong picks in the semiconductor sector despite recent performance challenges and cooling in AI sentiment. With both companies showing resilience and promising outlooks, they are positioned to benefit from ongoing and future developments in the semiconductor market.

FAQ