This article first appeared on GuruFocus.
Nvidia (NASDAQ:NVDA) shares rose Monday, gaining 1.3% in premarket trading, after a challenging few weeks for the chip maker.
Over the past month, the stock has slid about 6%, as investors weigh competition from Google’s Tensor Processing Units.
The stock surged mainly because analysts at J.P. Morgan see the recent dip as a potential buying opportunity. They maintain an Overweight rating on Nvidia stock with a $250 price target, citing a strong order pipeline. Bram Kaplan, a J.P. Morgan analyst, suggests selling put options on Nvidia with a $160 strike price expiring in March 2026.
The premium on these options stands at $8.50 per share. Kaplan notes that even if the stock falls below $160, investors could effectively buy shares at a net price of $151.50, representing roughly 65% upside to the firm’s target.
Other chip makers also saw modest gains like Advanced Micro Devices (NASDAQ:AMD) climbed 0.8%, while Broadcom (NASDAQ:AVGO) rose 0.9%, recovering slightly after an 11% drop on Friday following disappointing earnings.
In short, the surge reflects a combination of investor confidence in Nvidia’s growth prospects, perceived overreaction to short-term competition, and options-based trading strategies that can drive gains.
