Nvidia Stock Bounces 2% as Chip Rebound Follows Brutal Friday Rout, Even as Melius Slashes Price Target

Nvidia shares rose nearly 2% in early trading Monday as chip stocks rebounded from a punishing sell-off at the end of last week, though an analyst price-target cut highlighted lingering worries about artificial intelligence spending.

Nvidia stock gained $3.68, or 1.80%, to $208.32 shortly after the open. The shares had closed at $204.64 on Friday.

Rebound after a rout

The gains follow a steep decline on Friday, when Nvidia fell 4.22%. The Philadelphia Semiconductor Index plunged more than 7% that day, and the Nasdaq fell nearly 3%.

The sell-off was driven by concerns that massive spending on AI infrastructure by technology giants may not generate adequate returns. Intel shares tumbled 28.58% after the chipmaker issued a weak outlook, one of the worst single-day drops in its history.

Investors also reacted to Alphabet's historic share price slump last week and to Amazon's much larger-than-expected capital spending.

On Monday, chipmakers including Nvidia, Advanced Micro Devices, Micron and Broadcom traded higher as investors looked to buy the dip. Intel remained under pressure.

A rough October

Nvidia had a difficult October. The stock fell about 10% during the month after hitting a record close of $239.24 early in October.

Its 52-week range runs from $164.27 to $243.37. The stock's 50-day moving average is about $222, while its 200-day average is about $204, a key technical level that the shares tested on Friday.

Despite the recent pullback, Nvidia has risen about 15% this year, slightly ahead of the S&P 500.

The company has a market value of nearly $5 trillion.

Melius cuts target

Melius Research lowered its price target on Nvidia to $315 from $420 on Monday, but kept its buy rating.

Analysts remain overwhelmingly positive on the stock. Of the analysts covering Nvidia, 54 rate it a buy or strong buy and one rates it a hold, according to MarketBeat. The average price target is about $321, well above the current price.

Skeptics warn of more pain

Not everyone believes the sell-off is over. Veteran trader Tom Sosnoff said the decline in chip stocks may be "just the beginning," arguing that Nvidia, AMD and Micron would need to fall 25% to 35% before they look oversold.

Some technical analysts have also described Nvidia's chart as damaged and warned that a break below key support levels could lead to further weakness.

AI spending debate

Nvidia's fortunes are closely tied to spending on AI data centers by companies such as Microsoft, Alphabet, Amazon and Meta.

Those companies have continued to raise their capital spending plans. Amazon now expects to spend about $220 billion this year and said spending would rise significantly in 2027, while Alphabet expects to increase spending significantly next year.

That spending supports demand for Nvidia's chips, but investors are increasingly questioning whether the investments will pay off, putting pressure on AI-related stocks.

Earnings ahead

Nvidia is expected to report its quarterly results later this month, a key event for the AI trade. Investors will look for signs that demand for its chips remains strong despite concerns about customer spending.

Other deals

Elsewhere in the chip sector, Marvell Technology agreed to buy Lumentum, according to market reports Monday.

Nvidia's near-term direction is likely to depend on broader sentiment toward AI spending and the results of its upcoming earnings report. Monday's bounce offered relief, but analysts say volatility is likely to continue.