Piper Sandler believes Nvidia stock is about to make a comeback.
On Thursday, analyst Harsh Kumar reaffirmed his Overweight rating and $200 price target for Nvidia NVDA +1.19% (ticker: NVDA ) stock, citing the company’s progress in working down its oversupply problems at retailers.
“We think Nvidia is having success with its strategy to rid excess channel inventory to ensure growth in CY23,” he wrote. “The company is also repricing existing Ampere inventory in the channel in order to help with the flush.”
Nvidia stock is up 4.2% to $125.59 in Thursday trading.
The analyst said the initial sales of the company’s new Ada Lovelace chip architecture based RTX 4090 card, which launched earlier this month, have been strong. He is optimistic for the upcoming other models of Nvidia’s new generation of graphics cards.
Kumar now expects Nvidia’s gaming business will start to grow sequentially, starting with the April 2023 quarter and through the company’s fiscal 2024.
“Overall, we feel that if we are not at the bottom right now, we are very close to the bottom for Nvidia’s business,” he wrote.
It’s been a difficult year for Nvidia. The chip maker has cut its financial forecasts several times over the past few months, blaming a softening economic environment and a sharp slowdown in demand for Nvidia gaming graphics cards. Management has said it would take time to work through a glut of prior-generation cards inventory at retailers.
Then there are competitive concerns. Advanced Micro Devices ( AMD ) is set to launch its upcoming RDNA 3 graphics cards at a product event on Nov. 3, and will provide more performance details for next-generation products.
Nvidia’s stock has plunged by about 57% this year, versus the 42% drop in the iShares Semiconductor ETF (SOXX), which tracks the performance of the ICE Semiconductor Index.