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recently, the stock of nvidia, the world's "ai chip overlord", has been sold off sharply, but goldman sachs is not intimidated by this trend.

last tuesday, nvidia's stock price plummeted 9.53%, and its market value evaporated by about $279 billion in a single day, setting a new record for u.s. stocks. nvidia's market value evaporated by about $400 billion last week.

nvidia was one of the biggest contributors to the s&p 500's worst start to september since 1953, though the index recovered some of its losses on monday, according to bespoke investment group.

despite the sell-off in nvidia shares, goldman sachs chief analyst toshiya hari maintained a buy rating on the chip giant.

asked on monday at the goldman sachs 2024 communications and technology conference whether the goldman team believes nvidia stock is oversold, hari responded: “yes, we think so.”

“(nvidia) hasn’t performed very well recently, but we remain positive on the stock,” hari said. “first, demand for accelerated computing remains very strong. we tend to spend a lot of time on the hyperscalers (amazon, google, microsoft, etc.), but you’re seeing demand broadening to the broader enterprise and even sovereign nations.”

nvidia's sell-off originated from the quarterly report for the second quarter of fiscal year 2025 released on august 28. although the financial report performed better than expected, it was still not good enough for wall street. although nvidia's revenue was 4.1% higher than wall street's expectations, the company's profit margin hit the lowest since the fourth quarter of fiscal year 2023.

one of the big debates in the market surrounding nvidia is whether its earnings momentum is sustainable.

goldman sachs' equity research team noted in a recent report that investor sentiment toward ai has "shifted nearly 180 degrees" since the beginning of 2023. investors' patience is wearing thin, and they want to see — rather than be told about — ai-driven revenue streams and margin improvements.

however, goldman sachs also stressed that profound technological changes like artificial intelligence cannot be judged based solely on short-term costs and returns. the bank predicts that by the second half of 2025, generative artificial intelligence will make a substantial contribution to industry growth.

“i think their competitive position is still very solid,” hari said of nvidia. “we do think that in the merchant silicon space, nvidia is the preferred choice, even compared to custom silicon, they have an advantage in terms of speed of innovation.”

in addition to the performance failing to meet wall street's highest expectations, the delivery problems of the highly anticipated blackwell chip, recent rumors of antitrust review, investors' cautiousness on ai investment and increased overall market volatility are all factors that drove nvidia's stock price plummet this time.

bank of america also said recently that nvidia's stock price plunge in the past week provided an attractive buying opportunity.

after a 14% plunge last week, nvidia's stock price rebounded 3.5% on monday, pushing up the nasdaq, which is dominated by technology stocks. so far this year, nvidia's stock price has risen by 121%.