Nvidia stock rallied Monday, as the AI chip powerhouse bounced back from last week's decline.
Nvidia climbed 4.1% to close at 109.02 in light trading volume, rising to its third test of resistance at its 21-day exponential moving average since late July. The stock last closed above that level in mid-July.
The semiconductor giant's shares took a hit recently amid growing concerns about a broad economic slowdown. Nvidia stock also took a dive last week on news of a delay for the company's next-generation AI processor. The chip company's stock posted its fourth straight weekly decline on Friday.
Nvidia Stock: Critical Role In AI
But Monday's rally underscored Wall Street expectations that the AI infrastructure build-out will remain strong and that Nvidia will play a critical role in the trend. Piper Sandler analysts Harsh Kumar and Robert Aguanno said the potential impact of the reported Nvidia chip delay could benefit rival AMD.
"We believe there is not a lot of truth to the NVDA chip delay, but if it is true, near-term this would bode well for AMD if NVDA is struggling with supply and/or timing of chips," they told clients in a note. AMD stock rallied the day the report came out. AMD shares were also up more than 1.5% Monday afternoon.
"Fundamentally, NVDA remains the strongest player in the AI accelerator space with an estimated share of 80% of the merchant market by 2028," the note said.
Aguanno said Nvidia may have gotten a boost Monday from news of a surge of memory chip exports from South Korea to Taiwan. "This would be seen as positive given that NVDA is marking up the memory and passing through that cost to the hyperscalers," Aguanno told Investor's Business Daily.
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