Nvidia’s Stock Performance Hits Record High
Nvidia’s stock surged to an all-time high on Monday, closing at an impressive $138.07 (€126.6), marking a 2.4% increase. This remarkable rise can be attributed to the robust demand for its cutting-edge Blackwell supercomputing AI chips. This is the second occasion this year that Nvidia’s shares have reached a record peak, following a notable surge in June. The stock’s ascent was further fueled by optimistic analyst assessments and a broader rally within the technology sector, contributing to record closings for the Dow Jones Industrial Average and the S&P 500. So far this year, Nvidia’s shares have skyrocketed by 180%, making it the second-best performer in the S&P 500.
After a sell-off in early September, prompted by a sector rotation and an antitrust investigation by the US Department of Justice, Nvidia’s shares rebounded sharply in October, jumping by 18% from the previous month. With the latest closing, Nvidia’s market capitalization eclipsed $3.4 trillion (€3.12 trillion), positioning it as the world’s second-largest company, just behind Apple, which holds a market cap of $3.51 trillion (€3.22 trillion). Microsoft follows closely in third place, with a valuation of $3.12 trillion (€2.86 trillion).
High Demand for Blackwell AI Chips
Nvidia’s impressive stock market trajectory is underpinned by extraordinary revenue growth, which has tripled over the past four quarters. The demand for Nvidia’s new Blackwell AI chips is so intense that production is reportedly fully booked for the next year, according to analysts at Morgan Stanley. Nvidia’s CEO, Jensen Huang, recently affirmed that Blackwell is in full-scale production, describing the demand as “insane,” thus alleviating concerns regarding earlier rumors of potential delays.
Since the AI boom of 2023, Nvidia has emerged as the primary beneficiary within the tech ecosystem, with its Graphics Processing Units (GPUs) widely utilized by industry titans such as Microsoft, Alphabet, Amazon, Meta, and OpenAI for various AI applications. According to Nvidia’s CFO, Colette Kress, approximately 45% of the company’s Data Center revenue in the second quarter originated from these cloud service providers. Currently, Nvidia supplies around 80% of the advanced AI chips employed globally for training Large Language Models (LLMs).
Josh Gibert, a market analyst at eToro, commented, “The bottom line is that the long-term story remains; demand is immense, and the juggernaut that is Nvidia continues to roll on.” He highlighted that the increasing AI expenditures by tech giants are expected to directly benefit Nvidia, asserting, “AI spending will remain elevated and clearly represents a technological revolution rather than a transient trend.” Analysts from Citi continue to regard Nvidia as the preeminent player in the AI sector, predicting that its AI chip sales to major tech firms will double this year. The consensus among analysts at Visible Alpha indicates a “buy” rating for Nvidia stock, with an average price target of $152.41. Additionally, Goldman Sachs analysts have adjusted their target price for Nvidia from $135 to $150, reflecting a 9% increase from current levels.
Revival in the Technology Sector
The broader technology sector has regained momentum in October as concerns about the pace of the Federal Reserve’s interest rate cuts re-emerge. Investors have begun reallocating funds back into tech stocks, particularly those associated with AI, as these companies tend to perform better during challenging macroeconomic conditions due to their significant cash reserves and growth potential.
AI-related stocks, in particular, are experiencing a resurgence in interest, bolstered by positive earnings reports from chip manufacturers. Taiwan Semiconductor Manufacturing Co. (TSMC), the largest contract chipmaker globally, reported a remarkable 36.5% annual revenue increase for the third quarter, surpassing market expectations. TSMC provides crucial components to tech giants, including Apple and Nvidia. Moreover, US-based server company Super Micro Computer disclosed that it ships over 100,000 high-end AI GPUs each quarter, indicating sustained strong demand in the AI sector.
Investors are keenly awaiting Nvidia’s upcoming third-quarter fiscal 2025 earnings report, set to be released next month. This report, alongside the impending US presidential election, is anticipated to significantly influence market trends, particularly amid ongoing concerns regarding potential restrictions on the export of AI chips to China. Such developments could have a notable impact on market sentiment, especially in the rapidly expanding AI sector.
