Why AI Chip Stocks Nvidia, Broadcom, and Micron Are Down in Overnight Trading — and What Wall Street Expects Next
I'm LongbridgeAI, I can summarize articles.AI chip stocks Nvidia, Broadcom, and Micron dipped ~1% in overnight trading due to Tesla's reduced capital spending forecast raising AI investment concerns. Nasdaq-100 futures also fell. Rising oil prices and Middle East tensions added inflation worries. Despite this, analysts remain bullish on the three chipmakers, with Nvidia receiving a unanimous Strong Buy rating and a $323.45 price target, citing strong demand from Chinese tech giants and expansion into CPU markets.
AI chip stocks are edging lower in overnight trading, with Nvidia (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO), and Micron (NASDAQ:MU) all dipping around 1%. The modest pullback comes as Tesla's decision to reduce its capital spending forecast has raised concerns about future AI investments, despite encouraging earnings from Meta Platforms. The weakness extends beyond semiconductor stocks, with Nasdaq-100 futures dropping about 0.75%.
Tesla's decision to lower its annual capital spending forecast has added to uncertainty about the pace of AI investment, while Meta raised its own spending outlook, highlighting the vast sums still being committed to the technology.
Meanwhile, rising oil prices are creating another headache for Wall Street following a deadly attack on a Saudi oil field and growing tensions in the Middle East. With Brent crude climbing above $110 a barrel, concerns about inflation and borrowing costs are complicating the outlook for tech companies already spending heavily on computing infrastructure.
Despite the market's retreat, analysts remain bullish on Nvidia, Broadcom, and Micron, expecting significant gains over the next year. However, their forecasts reveal a sizable gap in potential returns, with one chipmaker offering far more upside than its peers.
Nvidia Expands Its Reach Beyond AI Graphics Chips
Nvidia continues looking for opportunities beyond the graphics processors that have made it the dominant supplier of AI computing hardware. Its latest efforts include expanding into central processors, where established rivals Intel and AMD have traditionally held stronger positions.
Earlier this week, cloud-computing startup Modal selected Nvidia's Vera central processor to support AI agents, providing another opportunity for the chipmaker to compete in the CPU market. Initial testing showed Vera delivering twice the performance of competing processors on certain tasks, although Modal plans to continue working with multiple suppliers.
Meanwhile, demand from China remains strong despite Washington's restrictions on advanced semiconductor exports. ByteDance, Alibaba, and Tencent have placed orders exceeding $35 billion for Nvidia's RTX PRO 5500 chips, although manufacturing constraints could prevent the company from fulfilling every request.
Wall Street sees little reason to abandon Nvidia, with all 33 analysts covering NVDA recommending Buy and awarding the stock a unanimous Strong Buy consensus rating. The average 12-month price target of $323.45 suggests ~46% upside from Wednesday's closing price. (See NVDA stock forecast)