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Nvidia stock has slipped recently, despite notching incredible gains this year. But that could be a positive thing, according to Mizuho Securities analyst Jordan Klein.
The “high market and tech sector concentration” on the chip maker “is not healthy and may not be sustainable,” Klein wrote. Adding: “If the broader market and Tech sector is dependent on NVDA to lead the way for rest of the year, I fear we have a REAL PROBLEM.”
He…
stock has slipped recently, despite notching incredible gains this year. But that could be a positive thing, according to Mizuho Securities analyst Jordan Klein.
The “high market and tech sector concentration” on the chip maker “is not healthy and may not be sustainable,” Klein wrote. Adding: “If the broader market and Tech sector is dependent on NVDA to lead the way for rest of the year, I fear we have a REAL PROBLEM.”
He said that any market movers coming from elsewhere in the tech sector should be viewed as positive going into the second half of the year.
The analyst pointed to the positive direction of other technology companies’ shares as signs of health for the market. Over the past two weeks,
stock has fallen 7% and Broadcom has lost 4.5%. But other tech names have made strides—ServiceNow gained 9%, Adobe rose 8%, while Apple and Microsoft each moved up 4%.
Despite this, Klein said Nvidia’s recent downturn may be overblown and he still sees a bullish case for the stock in the second half of the year. “We have seen [the] stock trade sideways after a monster run before. And it was followed with a material breakout to the upside,” he wrote.
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“A period of the stock [trading] flat to down modestly should not really blow up the bull thesis,” he added. “[The] stock to me looks like it wants to hold the $120 level.”
Nvidia stock was up 1.1% to $121.73 in morning trading Wednesday. This year, shares have soared 150%.
Write to Emily Dattilo at emily.dattilo@dowjones.com