It's time to add Nvidia to the Christmas shopping list as semiconductor stocks start to carve out a price floor after a steep sell-off, Citigroup told clients Thursday.
Not only have Nvidia estimates been cut 18 percent on lower cryptocurrency demands, but gaming chip sale expectations have been reduced to make the stock look cheap, analyst Atif Malik wrote.
"Citi semiconductor team believes a bottom is forming in semiconductor stocks which could be a good entry point into high quality companies where Street estimates have already been cut sharply," Malik wrote. We're "adding Nvidia to Citi Semis Christmas Shopping list on bottom picking."
Nvidia, which makes graphics chips used in gaming consoles and data centers, saw its shares sink 18 percent in extended trading on Nov. 15 after the chipmaker forecast falling revenue for the current quarter. The stock is in the middle of what's become an abrupt about-face from last year, when it soared more than 80 percent.
Analysts have pointed to last year's bitcoin boom and subsequent plunge for the whipsaw in Nvidia's share price. But despite the recent turbulence, Malik and others have highlighted healthy revenue growth in its data center business and have started to wonder if the worst of the chipmaker's sell-off could be over.
The VanEck Vectors Semiconductor ETF, an fund that tracks the performance of a variety of chipmaker stocks, is down more than 15 percent over the past six months, but only down 0.1 percent in the last one-month period. Nvidia shares traded flat Thursday and ended the day at $148.89.