Nvidia stock (NVDA) was on track for a weekly loss of nearly 2% on Friday as investors continue to process the difficult past few weeks for the hottest trading of the year.

But Wall Street analysts remained confident this week about the long-term prospects for Nvidia, whose stock has lost about 20 percent in the past month and is more than 25 percent below its year-ago level since hitting a record high at the close of trading.

Earlier this week, analysts at Piper Sandler called it a “great opportunity” to buy Nvidia, AMD (AMD) and ON Semiconductor (ON) after a recent sell-off in the sector.

Some analysts also used this sell-off as an opportunity to upgrade the stock.

“I think that for 2025 … everything is pretty well set up,” Antoine Chkaiban, technology infrastructure analyst at New Street Research, told Yahoo Finance on Thursday. “We know roughly how much (hyperscalers) expect to grow in capital expenditures. The plans are already set.” New Street upgraded Nvidia to “buy” this week with a $120 price target.

On Friday, chipmaker TSMC (TSM), a supplier to Nvidia, reported a 45% year-on-year increase in sales in July, a sign that demand for AI remains strong.

“We continue to see strong demand across the board and this mitigates the risk of a supply disruption as customers wait for the next generation of chips to become available in large quantities,” Chkaiban said.

The so-called hyperscalers – Microsoft (MSFT), Meta (META), Amazon (AMZN) and Alphabet (GOOG, GOOGL) – remained unchanged in their commitment to AI investments in their latest earnings reports. And much of that investment is going directly to Nvidia.

“Investors are likely to turn back to AI-focused names as this area (semiconductors) is still the only area where money is flowing in terms of customer spending, as evidenced by the capital expenditure increases of several hyperscalers this reporting period,” Blayne Curtis, an analyst at Jefferies, told Yahoo Finance on Friday.

Rumors of a possible delay in Nvidia’s next Blackwell chip put additional pressure on the stock price earlier this week. A two-month wait for the chips would not be insignificant, analysts say, but it would still not be enough to boost Wall Street expectations.

Curtis’ team said in a recent statement that Nvidia’s delays “are real, but do not change the thesis.” The company will report its quarterly results at the end of August.

Analysts and strategists who look at the markets more broadly also see an opportunity in the recent slowdown in AI trading.

Keith Lerner, chief marketing strategist at Truist Advisory, upgraded the technology sector to overweight on Thursday after it fell 12% from its mid-July peak, with semiconductors losing nearly 20%. Lerner noted that despite the decline in these stocks, future earnings estimates for the technology sector continue to rise.

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“This suggests that the recent pullback is due to overcrowding rather than a change in fundamentals,” Lerner wrote in a note to clients.

“In addition, we expect investors to return to the technology sector in a cooling economic environment given the long-term tailwinds provided by artificial intelligence (AI) and its excellent growth prospects. In addition, we have observed a continued trend in capital spending on AI during the current earnings season.”

But the recent shift in sentiment does not necessarily answer the question that investors will be asking over time: How will these massive investments in AI ultimately pay off?

“When it comes to technology, not only is the macroeconomic picture very obvious, but also the fact that people want to see evidence that GenAI trading is actually producing positive results,” Luke Barrs, managing director of Goldman Sachs Asset Management, told Yahoo Finance on Friday.

“We just have to be cautious and wait and see how things develop over the next year or two.”

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

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