Nvidia Stock on Course for 2-Week Losing Streak. What Wall Street Thinks AI Bubble Fears.

Nvidia chips are the favored choice for training artificial-intelligence models. (Dreamstime)

Nvidia stock was gaining early on Thursday. Optimism about the chip maker’s coming earnings offset concerns over whether momentum around the artificial-intelligence trade can be sustained.

Nvidia shares were up 0.6% at $176.52 in premarket trading. The stock fell 0.1% on Wednesday.

The stock is currently set to record its first two-week losing streak since April amid fears of an AI bubble, following a warning by OpenAI CEO Sam Altman that investors had become “overenthusiastic.” Meanwhile, Meta Platforms has frozen hiring in its AI division following a monthslong recruiting spree of top talent, according to The Wall Street Journal.

“While we think some caution may be warranted in the more cyclical parts of tech, we remain confident in the broader AI sector’s long-term growth and resilience,” wrote Mark Haefele, chief investment officer at UBS Global Wealth Management in a research note.

Haefele noted cloud-computing revenue at the three largest platforms
grew by an average of more than 25% year over year in the June quarter and large-cap technology company earnings have been solid.

Nvidia will provide some crucial context on Aug. 27 when it reports earnings. The significant doubt hanging over the results is whether its financial forecasts will include sales in China, which require license approvals for H20 chips to be sold and for the company to give the U.S. government 15% of the revenue generated.

Susquehanna analyst Christopher Rolland raised his target price on Nvidia to $210 from $180 and reiterated a Positive rating, in a research note previewing the earnings.

“While we are raising our estimates as checks around the supply chain remain solid, we note that we are slightly below the Street for October as some estimates reflect H20 revenue (we continue to exclude as we await formal guidance from the company),” Rolland wrote.

Rolland noted H20 chip sales in China could generate around $8 billion of additional revenue in the second half of this year.

However, such business could prove controversial both in Washington and Beijing — Chinese regulators are looking to dissuade domestic technology companies from buying Nvidia hardware following remarks by Commerce Secretary Howard Lutnick saying the aim was to get China’s companies “addicted” to American technology, according to a Financial Times report on Thursday.

Among other chip makers, Advanced Micro Devices was up 1.1% and Broadcom was 0.6% in premarket trading.

Write to Adam Clark at adam.clark@barrons.com