Nvidia's stock pares losses and remains on track for yet another monthly gain

By Tomi Kilgore

Two-day selloff follows Bloomberg report that China is urging companies not to buy Nvidia chips

Shares of Nvidia Corp. fell again on Monday but remained on track for another monthly gain as Wall Street continued to tout the semiconductor maker as a driver of the artificial-intelligence revolution.

The stock (NVDA) slipped 0.7% in morning trading but pared an earlier intraday loss of as much as 2.7%, after shedding 2.1% on Friday.

The two-day selloff comes after Bloomberg reported on Friday, citing people familiar with the matter, that China has been urging its companies to avoid buying Nvidia chips to run their AI models.

The report noted that China wasn't banning companies from buying the chips, however, because it didn't want to increase trade tensions with the U.S. and wanted to avoid hurting domestic AI startups.

In Nvidia's latest quarter through July 28, the company generated $3.67 billion in revenue from China, or 12.2% of its total revenue of $30.04 billion.

Meanwhile, the stock was still up 1% in September, after rising 2% in August. It has soared 143.4% year to date and was headed for its seventh monthly gain this year.

Wedbush analysts wrote in a Monday note that after time spent in Asia, "we are even more confident in our AI Revolution demand thesis heading into the next 12 to 18 months."

The analysts said that revolution was fueling "unparalleled demand" for Nvidia's AI chips.

Wedbush analysts said they believe the stage is now set for a further rally into the end of the year, including a 10% gain for the broader technology sector over the next three months. They also believe sector will rally another 20% this year.

The Technology Select Sector SPDR exchange-traded fund XLK has gained 16.7% year to date, while the S&P 500 SPX has advanced 20.2%.

-Tomi Kilgore

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09-30-24 1146ET

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