Nvidia shares (NVDA) rose as much as 5% on Monday, leading a rally in technology stocks as Wall Street continued to debate whether the recent slump in the overall semiconductor sector has gone too far.

On Monday, Bank of America analyst Vivek Arya noted that Nvidia is one of the company’s top candidates for a recovery, as he expects the semiconductor industry to make a comeback by the end of 2024.

“Our base case remains a (semiconductor) recovery, likely in the fourth quarter as seasonal headwinds subside,” Arya wrote in a note to clients.

Arya noted that Broadcom (AVGO) and KLA Corporation (KLAC) could also benefit from a recovery as they are the “most profitable vendors in their respective end markets” alongside Nvidia.

The PHLX Semiconductor Index (^SOX) has fallen nearly 18% over the past month, while Nvidia stock has declined more than 15% over the same period. The sector has been ripped apart by market participants in a rotation out of the large-cap technology sector.

Arya argued that volatility is likely to continue until Nvidia’s next earnings release on August 28 and into September, which is historically the worst month of the year for semiconductor stocks. Arya noted that the current uptrend in semiconductor stocks has only lasted for four quarters, while previous uptrends typically lasted about 10 quarters.

Nvidia stock, in particular, is under pressure due to growing concerns about the adoption of its Blackwell chip. Last week, The Information reported that the release of Nvidia’s upcoming next-generation AI chips would be delayed by three months, potentially affecting major customers like Microsoft (MSFT), Alphabet (GOOGL, GOOG) and Meta (META).

Nvidia then issued a statement saying that production of the next Blackwell chips was “on track” in the second half of the year. And Wall Street analysts believe the problem will be resolved.

“If it’s truly a supply or timing issue, I think most investors are willing to look past that,” John Vinh, equity analyst at KeyBanc Capital Markets, told Yahoo Finance. “If it was a demand issue, I think we’d have other issues here with Nvidia. But from our perspective, we think they’re going to beat and raise (earnings forecast). We don’t think near-term demand is going to be an issue at all.”

In a note to clients on Monday, UBS analyst Timothy Arcuri maintained his buy rating on the stock and a $150 price target, but also noted that he believes deliveries to Blackwell’s customers will likely be delayed by “at most” four to six weeks.

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“Lead customers should be able to launch the first Blackwell instances in April 2025,” Arcuri wrote. “AI labs are still scaling and extending their instance commitments, and the enterprise share of the demand mix is ​​growing rapidly – both of which are optimistic indicators.”

In addition, Arcuri argued that the market may be underestimating Nvidia’s future earnings growth. Currently, Arcuri believes the market is pricing in Nvidia’s highest earnings growth in 2025. However, Arcuri argued that 2026 is “more likely to be up given our customer conversations.”

Josh Schafer is a reporter at Yahoo Finance. Follow him on X @_joshschafer.

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