Nvidia stock: what does it need to get its mojo back

Nvidia NVDA stock traded modestly higher on Monday, but investor attention is increasingly shifting toward the upcoming earnings season, where major technology companies are expected to provide fresh updates on artificial intelligence spending.

Shares of the AI chipmaker rose 0.93% to $204.69 on Monday, although the gain trailed the 1.8% advance in the PHLX Semiconductor Index.

Nvidia has underperformed the broader market, with the S&P 500 posting a 9% year-to-date gain against Nvidia's 8% gain.

The stock had declined 2.2% on Friday and narrowly held onto its position as the world's most valuable publicly traded company after Apple briefly overtook it by market capitalization before Nvidia regained the lead.

With Nvidia scheduled to report earnings later in the season, investors are looking to its largest customers for signals on future AI infrastructure spending.

Alphabet is set to kick off earnings for major technology companies on Wednesday, making its results an early indicator of whether hyperscalers remain committed to investing heavily in AI hardware.

AI spending outlook remains the key catalyst

Wall Street continues to view spending plans from large technology companies as the biggest near-term catalyst for Nvidia shares.

Strong commitments to AI infrastructure could reinforce demand for Nvidia's processors, while any signs of slower capital expenditure may increase investor concerns following the recent pullback in semiconductor stocks.

KeyBanc analyst John Vinh acknowledged Nvidia's leadership position but noted that investors remain cautious about several factors affecting sentiment.

“Street sentiment on the name is mixed, while Nvidia is the clear leader in Gen ai, concerns surround delays in Vera Rubin ramp timing and increasing competitive pressures,” Vinh wrote in a research note on Sunday.

Vinh maintained an Overweight rating on Nvidia stock with a $330 price target.

Competition within the AI hardware market also continues to intensify.

Startup Etched, which develops chips designed for AI inference workloads, is reportedly preparing to quadruple its valuation to approximately $20 billion in a new funding round led by existing investor Jane Street, according to a Wall Street Journal report.

Wall Street remains constructive despite sector volatility

Despite recent volatility across semiconductor stocks, several Wall Street firms continue to express confidence in Nvidia's long-term outlook.

Oppenheimer included Nvidia and Lam Research among the largest companies featured in its latest "best of the best" momentum screen.

The firm's proprietary Momentum Overlay scoring system ranks stocks based on risk-adjusted returns over six-, nine-, and 12-month periods while excluding the most recent month.

According to Oppenheimer, companies included in the screen carry Outperform ratings and Buy trend assessments.

Morgan Stanley also described the recent semiconductor selloff as an attractive buying opportunity.

According to a CNBC report, Morgan Stanley analyst Joseph Moore said the firm's preferred AI investments remain compute-focused companies such as Nvidia and Broadcom.

While maintaining its preference for AI compute leaders, Moore also said memory stocks have become increasingly attractive following the recent correction, describing them as a “compelling entry point.”

The upcoming earnings season is expected to provide investors with greater clarity on enterprise AI demand, capital spending plans, and whether Nvidia's largest customers remain committed to expanding their AI infrastructure investments.

Those updates could play a significant role in determining the next direction for Nvidia shares.