Nvidia stock has pulled back since touching a record high on Monday. Meanwhile, other AI chip stocks have fallen as well as Wall Street debates whether they're in a bubble.
AI-exposed semiconductor stocks that have dropped in recent days include Astera Labs, Credo Technology and Micron Technology.
In a client note Thursday, Mizuho Securities trading desk analyst Jordan Klein said those highfliers were due for a "modest reset and wake-up call" after their steep climb in the first three weeks of September.
It is "sometimes best to be careful and not get greedy," Klein said. "Nothing wrong with taking some profit or watching and waiting on the sidelines."
On Thursday, after the market open, Nvidia stock dropped below its 50-day moving average line, a negative technical sign. But it soon climbed back to that key level. It ended the regular session on the stock market today up 0.4% to 177.69.
Nvidia stock notched an all-time high of 184.55 intraday on Monday. But it fell 3.6% over the next two trading sessions.
Barclays analyst Tom O'Malley remains positive on Nvidia. In a client note Thursday, he reiterated his overweight, or buy, rating on Nvidia stock and raised his price target to 240 from 200.
O'Malley has turned more bullish on Nvidia following recent announcements of increased investments by cloud computing firms in artificial intelligence data centers. He noted that there are now more than $2 trillion of planned AI infrastructure investments.
Nvidia will be a principal beneficiary of the heightened spending, he said. However, the trend is also positive for rival AI accelerator producers AMD and Broadcom, O'Malley said.
Nvidia stock has a best possible IBD Composite Rating of 99, according to IBD Stock Checkup.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
