Nvidia stock (NVDA) gave up its initial gains and fell 2% as the market rally lost momentum Wednesday afternoon. The shares had previously gained along with other semiconductor stocks after analysts at Piper Sandler signaled a “tremendous opportunity” for investors to buy shares of the chip giant after shares fell more than 25% from recent highs.

“Fundamentally, NVDA remains the strongest player in the AI ​​accelerator space,” wrote Piper Sandler’s Harsh Kumar, highlighting the company’s next-generation chip. “We also believe the strong tailwind from the Blackwell architecture due out in October will continue to drive revenues well into 2025 as demand outstrips supply.”

“Therefore,” the company added, “we see tremendous opportunity in NVDA stock as the price is well below the $140 high.” Piper has an Overweight rating on the stock and a $140 price target.

During Monday’s market meltdown, The Information reported that there would be a three-month delay in the release of Nvidia’s upcoming next-generation AI chips, potentially impacting the company’s biggest customers like Microsoft, Alphabet and Meta.

Nvidia subsequently issued a statement saying that production of its next-generation Blackwell chip was “on track” and would “ramp up” in the second half of the year.

Kumar said besides Nvidia, Advanced Micro Devices (AMD) remains a “top pick” for the company as it gains market share in the traditional server market while battling incumbents like Intel. Intel (INTC) stock fell more than 28% last Friday after a poor quarterly report.

Piper Sandler’s team also sees an opportunity for AMD if there are delays in the production of Nvidia’s chips.

“We believe there is little truth to the NVDA chip delay, but if true, it would be a good sign for AMD in the short term if NVDA has chip supply and/or timing issues,” Kumar wrote.

Last Wednesday, Nvidia rose over 12% after rival AMD’s quarterly results showed that major technology companies continue to invest in their data center infrastructure – a promising sign for chip suppliers.

Chip stocks have seen big swings in recent weeks as big technology companies have led the market downturn.

Since the beginning of July, the Philly Semiconductor Index has fallen by almost 15 percent. According to Piper, this was a reason to rethink the reporting and look for “ideas that we believe are fundamentally well positioned.”

In addition to Nvidia and AMD, the company also sees ON Semiconductor (ON) as well positioned in this environment.

Early Wednesday, chip stocks continued their recovery, which was interrupted by the recent market slump that sent the Nasdaq Composite (^IXIC) into correction zone.

The story goes on

Nvidia shares fell more than 6% on Monday, while shares of the Magnificent Seven suffered losses of more than $650 billion in market capitalization in Monday’s stock market crash.

Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X at @ines_ferre.