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While the S&P 500 grew around 0.5%, Nvidia's (NASDAQ:NVDA) stock has lately been in a cooling-off period and dropped more than 8% over the past month. On the back of both internal and outside events, Bank of America analyst Vivek Arya sees this dip as fleeting and a normal part of the company's "soul-searching moment."
Speaking on Yahoo Finance's Opening Bid program, Arya connected the problems with execution, linked to Nvidia's move to their new Blackwell AI technology. Blackwell was hailed for its originality when it was published in March 2024, but its difficulties attracting customers have affected quarterly results. "The last two quarters have not been clean since they are experiencing growing pains from one generation of product to a new generation," Arya said.
Arya also cited concerns about Nvidia's exposure to China under future tariff threats with a new U.S. government and more general market dynamics influencing large-cap tech equities. Still, he is optimistic about Nvidia's long-term future despite near-term challenges, underlining the company's leadership role in the semiconductor sector and the growing appetite for artificial intelligence (AI).
This article first appeared on GuruFocus.