Semiconductor stocks, including AI chip leader Nvidia, wavered Monday as investors deliberated buying the dip vs. catching a falling knife.
On the stock market today, Nvidia stock alternated between gains and losses. Nvidia stock ended the regular session up 3.5% to 97.64.
The Philadelphia Semiconductor Index, known as SOX, also vacillated. The SOX includes the 30 largest semiconductor stocks traded in the U.S. The SOX closed the regular session up 2.7%.
On Thursday and Friday, semiconductor stocks and tech stocks broadly fell in response to President Donald Trump's "Liberation Day" tariffs, which he announced late Wednesday.
In a client note Monday, Bernstein analyst Stacy Rasgon reiterated his outperform rating on Nvidia stock with a price target of 185. But he expressed caution, given the current market climate.
Nvidia stock got "completely hammered along with everything else in the wake of the Trump Tariff Tsunami," he said. "We are not sure where Nvidia (or anything else) will bottom in the near term. But we do believe the AI narrative is still real. And once things do settle down (hopefully soon!) the stock at these levels is probably worth a look."
Nvidia's data-center servers for artificial intelligence likely will avoid the brunt of Trump's tariffs, he said.
"Analysis suggests the majority of Nvidia's U.S. AI server shipments likely come from Mexico," Rasgon said. "Products from Mexico that are compliant with the U.S.-Mexico-Canada agreement (USMCA) are (as of now) exempt from all new tariffs in Trump's order last week."
Last year, about 60% of Nvidia's U.S. AI servers originated in Mexico and about 30% came from Taiwan, he said.
"We note Nvidia suppliers also (are) currently in the process of building more Mexico plants," Rasgon said. So, "the mix will likely rise."
Negative Sentiment For Semiconductor Stocks
Elsewhere on Wall Street, Mizuho Securities trading-desk analyst Jordan Klein said investor sentiment in semiconductor stocks "could not be much worse."
Sentiment was already low before the Trump tariffs as most chipmakers are mired in a cyclical downturn in demand, Klein said in a client note. That's the result of soft sales of PCs, smartphones, automobiles and other finished goods that use semiconductors. The market previously was hoping for a second-half 2025 recovery in chip demand.
"The new tariffs completely upended any true hope or confidence in a rebound in 2H25," Klein said.
And the one hot segment, AI data center chips, earlier cooled due to concerns about a possible pullback in infrastructure spending.
Semiconductor and hardware stocks are "nearing oversold levels," but there's ample reason to be cautious, Klein said Monday.
Nvidia Stock Gets Price-Target Cut
The upcoming first-quarter earnings season probably won't help semiconductor stocks, Deutsche Bank analyst Ross Seymore said in a client note Sunday.
"Overall, we expect semiconductor stocks to remain under pressure due to tariff concerns," Seymore said. "To reflect this increased risk, we are lowering price targets across our coverage universe by a somewhat symbolic 10%, and look forward to making more informed adjustments throughout earnings season."
All told, Seymore lowered his price targets on 16 semiconductor stocks, including Arm Holdings, Astera Labs, Broadcom and Marvell Technology.
He cut his price target on Nvidia stock to 135 from 145 and reiterated his hold rating.
"Generally speaking, we expect muted prints/guides during 1Q25 earnings as ongoing AI-related demand is offset by a still-struggling cyclical rebound in broad-based semis … and a potentially weakening global macroeconomic outlook," Seymore said.
Meanwhile, JPMorgan analyst Harlan Sur said he sees the potential for more downside for semiconductor stocks.
"Here in 2025, with (semiconductor) stocks having already declined by approximately 25%-30% since the tariff concerns surfaced, we see the potential for further 10% downside (range of 5%-15%) over the next six months," Sur said in a client note Monday.
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