Why Nvidia's stock looks especially juicy in the near term, according to Citi

By Emily Bary

Citi thinks investors can capitalize on recent profit taking as chip-sector earnings are likely to hold good news for Nvidia

Nvidia Corp. was the S&P 500's best-performing stock in 2023 - by a wide margin - and trails only Super Micro Computer Inc. thus far in 2024.

Even with 78% gains for Nvidia shares (NVDA) so far year, Citi Research analyst Atif Malik sees the potential for further upside in the near term. He opened a 90-day positive "catalyst watch" on Nvidia shares Monday morning.

Nvidia shares have fallen about 7% from their peak close, and Malik sees opportunity following that "profit taking." His recent conversations with those in the supply chain have indicated good demand visibility into the first half of 2025.

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"We expect supply-chain commentary from key foundry/[high-bandwidth memory] suppliers during earnings and Computex Taiwan on June 2nd where Nvidia CEO Jensen Huang will deliver a keynote...could be positive catalysts for the stock," he wrote.

Heading into earnings, Citi analyst Christopher Danely added that his checks revealed that "investors are most positive on Nvidia and [Broadcom] driven by AI driving upside to estimates."

Shares of Nvidia were up almost 1% in premarket trading Monday.

Piper Sandler analyst Harsh Kumar also weighed in positively on Nvidia.

"Demand for the Hopper GPU which has been on the market for nearly two years remains strong as chips remain in allocation mode," he wrote. "We note that supply for the product has increased [quarter over quarter] but still has yet to catch up with demand and this dynamic is expected to continue through the year."

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Meanwhile, Nvidia's new Blackwell line "is expected to experience similar supply/demand dynamics of Hopper with supply needing to catch up over many quarters," but customers don't seem to be yanking their Hopper orders in anticipation of Blackwell's release.

"This is due to fears that supply for Blackwell will be constrained as the product ramps and customers will have to wait even longer to receive the accelerators," Kumar said.

-Emily Bary

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04-15-24 0910ET

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