Nvidia Stock Forecast: KeyBanc names NVDA as one of its top ideas for 2023

• KeyBanc listed Nvidia as a top pick for 2023.
• Semiconductors are expected to lose 4% of non-memory revenue compared to 2022.
• Much of semiconductor weakness appears in first half of 2023.
• AMD and Qualcomm are also expected to beneft from late 2023 improvement.

Nvidia (NVDA) was named one of KeyBanc Capital Markets' top ideas in the semicondctor industry for 2023 on Thursday. Although the investment bank has a generally negative outlook on the overall semiconductor industry for the year, a note to clients provided several reasons why specific stocks could benefit and looked relatively attractive.

Nvidia stock news: KeyBanc likes leading products

When the memory segment is cut out of the 2023 outlook, KeyBanc expects that semiconductor revenue will drop about 4% from 2022 levels. That is not a major positive for the industry of course, but KeyBanc analyst John Vinh thinks the pullback will mostly affect the first half of the year before a general amelioration in the latter half. 

"Despite a significant pullback (-36%) in the SOX in 2022, we continue to see a soft landing scenario for semis," said Vinh. SOX refers to the Philadelphia Semiconductors Index. 

Vinh argued in his note to clients that there was now better clarity concerning backlog orders and that prices for chips are expected to rise in the back half of 2023. He also said that because price-to-earnings levels for most major stocks in the Philadelphia Semiconductors Index had more than halved from their peak, much of the bad news concerning slowing demand had been priced into major stocks like Nvidia.

One major reason for overall optimism, according to KeyBanc, is that demand from automotive, AI applications, data centers and the cloud would partially offset the weakness seen since last year in the PC and smartphone segment.

KeyBanc thinks that CEO Jensen Huang's Nvidia will likely benefit despite overall weakness in semis due to its new fleet of RTX40 graphics cards and the AI-leading GPU Hopper architecture. Additionally, the note wrote postively about Advanced Micro Devices (AMD) and Qualcomm (QCOM) – two other leading fabless semi designers.

Nvidia stock forecast

Nvidia stock is descending on Thursday for the second session in a row. NVDA stock may have hit its range high on Tuesday and Wednesday when it met resistance around $177. A drop below the 9-day moving average near $164 would confirm that a longer-term sell-off is in motion. The mid-week high was well below the $187.90 range high from December 13, which would seem to signify that another bull run is off the table. In neither range high was the supply zone between $190 and $193 reached – a welcome sign for bears.

Now that the chart points lower, bulls will look for better entry points. $140 is the clearest nearby support level and served well surrounding the new year. Then there is the $110 to $120 demand zone. If the market tanks and the sell-off reaches into the semiconductor space, then expect NVDA to drop all the way to that support zone.

NVDA daily chart