Nvidia's stock soared to a record high on Monday, closing up 2.4% at $138.07 (€126.6), driven by strong demand for its new Blackwell supercomputing AI chips. This marks the second time Nvidia's shares have hit an all-time high this year, following a peak in June. The surge came amid positive analyst commentary and a broader rally in the technology sector, contributing to record closes for the Dow Jones Industrial Average and the S&P 500. Nvidia’s shares have now risen by 180% year-to-date, making it the second-best performer in the S&P 500.
After experiencing a sell-off in early September due to sector rotations and an antitrust investigation by the US Department of Justice, Nvidia shares quickly rebounded in October, rising 18% from the previous month. With Monday's close, Nvidia’s market capitalisation surpassed $3.4 trillion (€3.12 trillion), solidifying its position as the world's second-largest company, behind Apple, which boasts a market cap of $3.51 trillion (€3.22 trillion). Microsoft ranks third, with a valuation of $3.12 trillion (€2.86 trillion).
Blackwell AI chips in high demand
Nvidia’s exceptional stock market performance is underpinned by strong revenue growth, which has tripled over the past four quarters. Its new Blackwell AI chips are in such high demand that production is reportedly booked out for a year, according to Morgan Stanley analysts. Nvidia CEO Jensen Huang recently confirmed that Blackwell is in full production, calling demand "insane," easing concerns over previous rumours of delays.
Since the AI boom of 2023, Nvidia has become the leading beneficiary, with its Graphics Processing Units (GPUs) widely used by tech giants like Microsoft, Alphabet, Amazon, Meta, and OpenAI for AI applications. The company’s CFO, Colette Kress, revealed that around 45% of Nvidia's Data Centre revenue came from these cloud providers in the second quarter. Nvidia currently supplies 80% of advanced AI chips used globally for training Large Language Models (LLMs).
Josh Gibert, market analyst at eToro, said: “The bottom line is that the long-term story remains, demand is huge and the juggernaut that is Nvidia rolls on.” He added that rising AI spending by tech giants will go straight to Nvidia: “AI spending will stay high and quite clearly remains a technology revolution rather than a passing fad.”
Citi analysts continue to label Nvidia as the dominant player in the AI sector and predict its AI chip sales to tech giants will double this year. The consensus from Visible Alpha suggests analysts maintain a "buy" rating on Nvidia stock, with an average price target of $152.41. Goldman Sachs analysts also raised their target price for Nvidia from $135 to $150, representing a 9% increase from current levels.
Technology sector sees revival
The broader technology sector has regained momentum in October, as concerns about the pace of the Federal Reserve's rate cuts resurface. Investors have started rotating funds back into tech stocks, particularly those related to AI, as these companies tend to fare better in tough macroeconomic conditions due to their cash reserves and growth potential.
AI-related stocks, in particular, are seeing renewed interest, bolstered by positive earnings from chipmakers. Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, reported a 36.5% annual revenue increase for the third quarter, exceeding market expectations. TSMC supplies tech giants such as Apple and Nvidia. Additionally, US server company Super Micro Computer revealed that it ships over 100,000 high-end AI GPUs per quarter, signalling continued robust demand in the AI sector.
Nvidia’s upcoming third-quarter fiscal 2025 earnings report, due next month, will be closely watched by investors. Along with the US presidential election, it is expected to influence market trends, particularly amid ongoing concerns about potential restrictions on exporting AI chips to China. These developments could affect market sentiment, especially in the rapidly growing AI sector.
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