Nvidia (NVDA) stock showed a strong rally on Monday, recovering from last week's decline as the AI chip powerhouse regained investor confidence. The stock surged approximately 5% to reach $109.93, albeit in light trading volume. This ascent marked the third test of resistance at its 21-day exponential moving average since late July, with the stock last closing above that level in mid-July.

The semiconductor giant had faced challenges in recent times, with concerns about a broader economic slowdown weighing down its shares. Additionally, news of a delay in Nvidia's next-generation AI processor further dampened investor sentiment, leading to a decline last week. This slide resulted in the stock posting its fourth straight weekly decline before Monday's rebound.

However, the rally witnessed on Monday highlighted Wall Street's confidence in the ongoing strength of the AI infrastructure build-out, with Nvidia poised to play a crucial role in this evolving trend. Analysts at Piper Sandler, Harsh Kumar, and Robert Aguanno, shared their optimism and stated that if the reported Nvidia chip delay proves true, it could potentially benefit its competitor AMD. They added, "We believe there is not a lot of truth to the NVDA chip delay, but if it is true, near-term this would bode well for AMD if NVDA is struggling with supply and/or timing of chips." Consequently, AMD (AMD) stock also experienced a rally, registering an increase of over 1.5% on Monday afternoon.

The analysts further emphasized that, fundamentally, Nvidia remains the dominant player in the AI accelerator space, projected to hold an estimated 80% share of the merchant market by 2028. These projections reflect the long-term strength and potential growth that Nvidia possesses within the industry.

Robert Aguanno, during an interview with Investor's Business Daily, noted that Nvidia may have been bolstered by recent news of a surge in memory chip exports from South Korea to Taiwan. This development is viewed positively as Nvidia can mark up the cost of memory before passing it on to the hyperscalers, ultimately benefiting their financial position.

The rebound in Nvidia's stock raises hopes for investors who believe in the company's continued success in the AI infrastructure space. While concerns remain about potential delays and broader economic conditions, Nvidia's recent rally indicates that optimism still prevails among industry experts and market participants.