Nvidia (NASDAQ:NVDA) shares closed 4.7% lower yesterday to hit a 4-week low.
Citi analysts attributed the weakness to comments made on Super Micro Computer’s (NASDAQ:SMCI) earnings call about component supply constraints from Nvidia and others in the supply chain.
“While we acknowledge HBM and advanced packaging are currently the manufacturing bottlenecks for the supply chain, we believe the comments are not fully reflective of Nvidia’s supply situation as Nvidia has made pre-payments to line up majority of the HBM industry capacity and is prioritizing supply to hyperscalers and other major OEMs,” analysts said in a client note.
The analysts remain above consensus for Nvidia’s data center sales for this and the upcoming quarter.
“Nvidia’s data center sales are less of a function of units and more of mix/pricing,” they added.
Overall, analysts believe the supply concerns are now overdone and urged clients to “buy this weakness” in Nvidia stock.
It was reported yesterday in the Financial Times that China’s internet giants Baidu (NASDAQ:BIDU), TikTok owner ByteDance, Tencent (OTC:TCEHY), and Alibaba (NYSE:BABA) ordered about $5 billion worth of Nvidia’s high-end chips.
All companies reportedly made orders worth $1B to acquire 100,000 A800 processors.
Nvidia stock is down a further 1.2% in pre-open Thursday.