Nvidia (NVDA) spearheaded a resurgence among the “Magnificent Seven” tech giants at the start of 2025, recovering from a collective sell-off in the final days of 2024. The AI chipmaker’s stock surged 4.5% on Friday, building on a roughly 3% gain from the previous day.
This upswing followed a 4% decline across megacap tech stocks between Christmas Eve and New Year’s Eve, defying the traditional “Santa Claus” rally. Tesla (TSLA) experienced a significant plunge of nearly 13% during this period, while Amazon (AMZN) and Microsoft (MSFT) both retreated more than 4%. Meta (META) and Google (GOOG) each dipped just under 4%, and Apple (AAPL) saw a 3% drop.
Despite December’s downturn, Nvidia concluded 2024 with an impressive gain exceeding 150%. Wall Street analysts maintain a bullish outlook on the stock, projecting a potential rise to around $173 over the next year from its current level of $138, based on Yahoo Finance data.
Bank of America analyst Vivek Arya attributed Nvidia’s late-year stock decline to broader market trends and company-specific factors. Speaking on the Opening Bid podcast, Arya highlighted a shift in investment from semiconductors to software, citing the latter’s reduced vulnerability to US-China trade restrictions. He also noted Nvidia’s “growing pains” transitioning from its Hopper product generation to the new generation.
Arya specifically addressed concerns regarding shipment delays of Nvidia’s latest Blackwell artificial intelligence chips. However, he characterized these issues as short-term. He pointed out a potential buying opportunity, noting that while other Magnificent Seven companies trade at twice their average 2025 earnings growth estimates, Nvidia trades at less than one times its consensus earnings growth for the upcoming year. Arya maintains a Buy rating on Nvidia with a 12-month price target of $190.
Investor enthusiasm for artificial intelligence and robust earnings growth have fueled the impressive performance of Nvidia and its Magnificent Seven peers. According to Yahoo Finance’s Josh Schafer, these seven companies collectively achieved a 33% year-over-year earnings increase in 2024 through the first three quarters of reporting, compared to just 4.2% growth for the remaining 493 S&P 500 companies, per FactSet data.
While some skeptics caution about a potential AI bubble, warning of a possible stock market correction if enthusiasm for the technology wanes, Wall Street analysts generally remain confident in the continued growth of AI.
Tesla also experienced a significant surge on Friday, jumping over 8%. Alphabet, Microsoft, and Meta each saw gains of around 1%, while Amazon climbed nearly 2%. Apple’s stock remained relatively flat.
In conclusion, Nvidia’s strong performance signals a positive start to 2025 for the Magnificent Seven tech stocks. While short-term challenges exist, the long-term outlook for Nvidia and the AI sector remains positive, driven by continued innovation and investor confidence. Despite concerns about a potential bubble, the market currently reflects a sustained belief in the transformative power of artificial intelligence.
