Analyst Remains Upbeat on Nvidia (NVDA) Stock Despite Recent Pullback

Although Nvidia (NVDA) stock had fallen more than 10% from its all-time high as of yesterday, entering correction territory, KeyBanc analyst John Vinh remains bullish on the chip maker’s outlook.

Vinh, who has an Overweight rating and a $180 price target on the shares, noted that Nvidia has continued to surpass the average expectations of Wall Street analysts. Moreover, the Street keeps raising their estimates for the chip maker, the analyst added.

Another reason for Vinh’s bullishness on NVDA stock is his positive view of the company’s upcoming Blackwell chips. Specifically, the analyst stated that these chips will enable the company to benefit from higher prices and provide its customers with superior AI training capabilities. Also importantly, Vinh expects Nvidia’s AI chips to continue to outperform those of its competitors going forward.

Despite the analyst’s optimism about the firm’s outlook, he did discuss a bear-case scenario for Nvidia.  Vinh suggested that Nvidia could lose share to a number of its competitors, including Broadcom (AVGO) and AMD (AMD). He noted that Broadcom predicted recently that its revenue from AI chips would quadruple to $60 billion to $90 billion in three years. Additionally, he stated that a number of large companies, including Google (GOOGL), are building their own AI chips.

Vinh believes that these concerns are among the reasons for the recent decline of NVDA stock. However, he continues to recommend buying the stock at its current levels, citing the positive outlook for the AI chip market.

While we acknowledge the potential of NVDA, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ ALSO 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock

Disclosure: None. This article is originally published at Insider Monkey.