The rally in tech stocks, backed by a possible slowdown in the Federal Reserve’s interest rate hikes and is good news for chip makers. NVDA stock (NVDA:NSD) and AMD stock (AMD:NSD) are leading the charge and investors seem to be quite bullish on their prospects for the future. With average price targets that offer an upside potential of nearly 30%, it looks like chip stocks may be ready to stage a comeback.
A recent report from Bank of America Merrill Lynch suggests that tech stocks are finally showing signs of life. The report suggests that tech stocks have been undervalued by investors for the last few months and that the recent rally is evidence that investors are finally willing to take a chance on the sector again.
The tech sector has been a laggard until now; the S&P 500 Technology Sector Index is up just 3.5 percent year-to-date, while the S&P 500 is up 11.5 percent. The tech sector is showing signs of life, however, as the Nasdaq is up 7.5 percent year-to-date, and has been performing well since mid-July.
The recent rally in tech stocks is being fueled by a combination of factors, including the possibility of a slowing in Fed rate hikes, improving global economic conditions, and a more favorable outlook for tech companies.
The tech sector is a key part of the U.S. economy, and its recent gains are a sign that the economy may be heading in the right direction. While it may be too early to call it a full-on tech sector rally, the signs are there that tech stocks are starting to come back.
Louis Navellier has declared that an increase in the federal funds rate by 75 basis points would not be detrimental to earnings. Moreover, tech stocks have the potential to rally as global markets have shown upward trends. Notably, the Shanghai Composite has reported gains for six consecutive days and the Hang Seng index has also experienced an increase.
Analysts are optimistic about the potential of AMD stock and Nvidia (NVDA stock) despite their stocks declining in the last 12 months. AMD stock has an average price target of $94.55, giving it a 24.74% upside, while NVDA stock has an average price target of $197.00, representing a 29.33% upside.
