It’s a complicated time for chipmakers in the United States, with some investors cashing out. That includes Paul Pelosi, who sold two chip stocks in September at a significant loss. In July, the husband of House Speaker Nancy Pelosi turned some heads after making a big bet on Nvidia (NASDAQ:NVDA) before the passing of the CHIPS Act. However, Pelosi sold that stake in NVDA stock after the investment generated controversy.
Although the historic passing of the CHIPS Act initially sent chip stocks up, many companies have struggled since. Industry giant Intel (NASDAQ:INTC) recently reported that demand for PC processors is falling, sending negative shockwaves throughout the industry. Now, Pelosi is cashing out of more semiconductor investments, although the move may be premature.
Despite NVDA stock’s turbulent performance of late, plenty of pundits flag it as a buy-the-dip opportunity. They argue that shares will rebound in the coming months.
Here’s why this former Wall Street darling may be primed for a comeback.
What’s Happening with NVDA Stock?
Since markets opened this morning, NVDA stock has been turbulent. Shares started the day by falling but are stabilizing relatively quickly. As of this writing, Nvidia is down less than 1% for the day. Pelosi also recently unloaded call options in chipmaker Micron Technology (NASDAQ:MU), which is down about 2% today.
According to a disclaimer, Pelosi sold his call options in both stocks about one month after the passing of the CHIPS Act. Since then, macroeconomic headwinds have mounted. News of Intel’s declining demand and pending layoffs haven’t helped restore investor confidence in the sector. Last week, the release of the consumer price index (CPI) report also pushed semiconductor stocks down further.
That said, InvestorPlace contributor Josh Enomoto recently rated NVDA stock as a bargain stock with the ability to rise above the problems currently facing the tech sector. Enomoto sees Nvidia ending the year in the green due to its applications in gaming and crypto mining. Fellow InvestorPlace contributor David Moadel sees the recent demand warning from chipmaker Advanced Micro Devices (NASDAQ:AMD) as an opportunity as well. Finally, Chris Lau advised investors to “get greedy” with NVDA after the bear market pullback on Nasdaq stocks.
The Bottom Line
It’s not just InvestorPlace contributors making the case for NVDA stock; Wall Street remains fairly bullish as well. Shares are still rated as a “moderate buy” on TipRanks, with 23 analysts rating it as a “buy.” Although Citi analyst Atif Malik recently reduced his price target, he also maintains a “buy” rating. Cowen analyst Matthew Ramsay rated Nvidia as a “buy” as well, maintaining a bullish $180 price target.
All told, Pelosi’s significant loss on the call options makes it clear that he sold NVDA stock at a bad time. Given some analyst ratings, others may not want to follow his example. There’s plenty of reason to believe shares will turn around in the months to come.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
