Nvidia has been enjoying a remarkable rally, recording its fifth consecutive day of gains on Tuesday before experiencing a slight decline on Wednesday. The stock has surged 12% since last week, driven by a series of favorable developments for the AI chipmaker.
The stock’s recent ascent has been bolstered by Wall Street analysts reaffirming their “Buy” ratings on Nvidia shares. KeyBanc, in a report, estimated that revenues from Nvidia’s new Blackwell chips could reach $7 billion in the fourth quarter alone. Additionally, demand for the company’s older GPUs remains “extremely robust,” according to analysts at Wedbush, who also noted that a potential new wave of funding for AI startups could further enhance Nvidia’s revenue.
During its AI Summit in Washington, D.C., Nvidia showcased the strength of its software offerings, further solidifying its position in the AI market. On the same day, Nvidia and Foxconn announced plans to construct Taiwan’s largest supercomputer during Foxconn’s annual technology showcase in Taipei. The partnership also includes details about a new mega-factory in Mexico dedicated to assembling Nvidia servers using its Grace Blackwell chips, a strategic move to reduce reliance on China amid increasing trade tensions.
This recent rally has effectively reversed earlier declines following the release of Nvidia’s second-quarter earnings, which fell short of investor expectations. Shares dipped in late August after the disappointing earnings report and further declined following a Bloomberg report about a subpoena from the U.S. Department of Justice, which Nvidia later denied. Concerns about potential disruptions to demand from China, amid rising trade tensions with the U.S., also contributed to the earlier drop. Notably, Nvidia’s volatility has been accentuated by its recent 10-for-1 stock split in June.
Positive news from the semiconductor sector on Wednesday could propel Nvidia’s stock to a new record close. TSMC, one of Nvidia’s key chip manufacturers, reported sales exceeding Wall Street’s expectations, reinforcing the belief that demand for AI technology will remain strong in the near term.
“AI is hot,” stated Patrick Moorhead, CEO of Moor Insights and Strategy, in an interview with Yahoo Finance. He added, “I see continued growth in the AI data center trades for the next 12 months.” This sentiment underscores the notion that Big Tech’s extensive investment in AI hardware is far from waning, despite concerns of a potential slowdown.
According to the most recent data reviewed by JPMorgan, semiconductor industry sales surged by 28% in August compared to the previous year and increased by 15% from July. Young Liu, the chair of Foxconn, highlighted in an interview that the company is ramping up capacity to meet the “crazy” demand for Nvidia AI chips, also known as GPUs. Nvidia CEO Jensen Huang echoed this sentiment last week in a CNBC interview, describing the demand for the latest Blackwell chips as “insane.”
With strong fundamentals and robust market signals, Nvidia is well-positioned to continue its upward trajectory in the rapidly evolving AI landscape.
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