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A BofA analyst maintained a Buy rating on NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD) on Monday, telling investors in a research note that there are near-term concerns about semiconductor stocks, but they are looking towards product cycles.
BofA monthly analysis of Steam’s GPU survey highlights continued AMD and NVDA mix improvements, but weaker third-party pricing still raises yellow flags, said the analyst.
“Notably, top gaming cards on the retail market are selling at an average 11% premium (relative to MSRP) versus upwards of a 160% premium last year. Following AMD’s weak Q2 gaming commentary (gaming graphics down QoQ in JunQ/SepQ), we acknowledge a potential upcoming gaming correction (a notable near-term headwind for NVDA as well, as we highlight in our cautious FQ2 outlook),” the analyst explained. “Still, following any near-term demand deceleration, we see potential for a large upgrade cycle bolstered by new AMD (RDNA3 GPUs) and NVDA (Lovelace RTX40xx series) cards.”
Nvidia shares tumbled more than 8% Monday after it cut its quarterly revenue forecast following a gaming slump. Meanwhile, AMD is down 3%.
“We maintain Buy on AMD/NVDA, exposed to robust cloud capex (see report), new product launches (NVDA 5nm Hopper accelerator/Grace CPU, AMD Genoa 5nm) and a discrete GPU market that has grown at a consistent 10%-15% CAGR,” concluded the analyst.
