Record-High Stock Performance
Nvidia’s shares reached an all-time high on Monday, closing at $138.07, propelled by soaring demand for its latest supercomputing AI chips, known as Blackwell. Analysts have expressed continued confidence in the company, maintaining “buy” ratings and increasing price targets as they anticipate ongoing success in the booming AI market. This remarkable stock performance reflects the overall positive sentiment surrounding tech stocks and aligns with record high closures for major market indices like the Dow Jones Industrial Average and the S&P 500.
Market Rebound Following Sell-Off
After a period of decline in early September, when Nvidia faced a sector rotation and an antitrust investigation by the U.S. Department of Justice, the company’s stock rebounded sharply in October, gaining 18% since the previous month. With its market capitalization now exceeding $3.4 trillion, Nvidia solidifies its status as the second-largest company globally, trailing only Apple, which holds a valuation of $3.51 trillion. Microsoft follows closely in third place with a market cap of $3.12 trillion.
High Demand for Blackwell Chips
Nvidia’s impressive stock growth is bolstered by significant revenue increases, which have tripled in the last year. The Blackwell AI chips are experiencing such high demand that production is reportedly full for the next year. CEO Jensen Huang termed the current demand as “insane,” alleviating concerns over earlier rumors of production delays. Since the AI surge in 2023, Nvidia has positioned itself as the go-to supplier for major tech companies, with around 80% of advanced AI chips used globally for training Large Language Models coming from its factories.
Continued Growth Outlook
Market analysts like Josh Gibert from eToro emphasize that the long-term growth story for Nvidia remains robust, citing increased spending on AI by tech giants. He predicts that this spending trend is not a fleeting phenomenon but a transformative technological revolution. Citi analysts have dubbed Nvidia the leading player in the AI space, forecasting a doubling of its AI chip sales to tech companies this year. Analysts maintain a strong “buy” rating, with average price targets rising as high as $152.41.
Tech Sector’s Resurgence
October has seen a revival in the broader tech sector, as concerns about the Federal Reserve’s interest rate strategies have prompted investors to redirect funds back into tech stocks, especially those associated with AI. Positive earnings reports from chipmakers, including a significant revenue increase from Taiwan Semiconductor Manufacturing Co. (TSMC), have fueled this renewed interest. Nvidia is gearing up for its upcoming third-quarter fiscal 2025 earnings report, which will be closely monitored by investors, especially against the backdrop of the U.S. presidential election and potential export restrictions on AI chips to China. These factors are likely to shape market dynamics in the rapidly evolving AI landscape.
SOURCE: Ref Image from The Outpost AI
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