Jamie Spencer
Nvidia (NVDA) is on the verge of a historic milestone, with its stock price surging amid growing investor confidence in the company’s stronghold in artificial intelligence (AI). Shares jumped more than 3% in early Monday trading, reaching over $138 and surpassing the previous record of $135.58 set in June. The surge comes on the heels of six consecutive days of gains throughout October, driven by increasing demand for AI chips and pivotal developments in the semiconductor industry.
AI Surge Drives Nvidia’s Market Performance
Nvidia’s impressive October rally started after a significant $6.6 billion funding round for OpenAI, the creator of ChatGPT. A large portion of this investment is expected to channel back into Nvidia as OpenAI ramps up its demand for advanced AI hardware. This development sparked renewed optimism among investors, propelling Nvidia’s stock upward as the tech sector seeks cutting-edge AI infrastructure.
Wall Street analysts have echoed their belief in Nvidia’s growth potential. KeyBanc recently forecasted that Nvidia could generate $7 billion in revenue in Q4 from its Blackwell chip line, while demand for older GPU models remains steady. Wedbush analysts highlighted that additional funding for AI startups could further boost Nvidia’s earnings, pushing the stock toward new heights.
Expanding Partnerships and Global Growth
Nvidia’s momentum isn’t confined to U.S. markets. At its AI Summit in Washington, D.C., the company underscored the increasing relevance of its software in the AI domain. A pivotal announcement came from Foxconn, revealing plans to build Taiwan’s largest supercomputer and a megafactory in Mexico dedicated to assembling Nvidia servers with Grace Blackwell chips. These strategic moves are poised to strengthen Nvidia’s global presence and lessen its dependency on Chinese manufacturing amid rising U.S.-China tensions.
The enthusiasm is shared by Foxconn’s chair, Young Liu, who told Bloomberg Television that demand for Nvidia’s AI chips has been “crazy,” as manufacturers race to meet market needs. Nvidia’s CEO, Jensen Huang, reinforced this view, telling CNBC that the demand for their new Blackwell chips has been “insane.”
Competing for the Top Spot
Nvidia’s market capitalization reached $3.4 trillion as of Monday, positioning the company close to overtaking Apple ($3.5 trillion) as the world’s most valuable corporation. Over the past year, Nvidia has vied with Apple and Microsoft for the top three spots in market value. Should Nvidia’s upward trend continue, it could soon claim the leading position.
This push comes after a challenging period earlier this year, when Nvidia’s shares dipped in August following second-quarter earnings that slightly missed expectations. The company also faced scrutiny over rising U.S.-China trade tensions and a subpoena from the U.S. Department of Justice in September, which Nvidia denied. Despite these setbacks, the stock has made a comeback, aided by a 10-for-1 stock split in June.
AI Demand and Semiconductor Sector Growth
The broader semiconductor sector is experiencing a surge in demand, thanks to the proliferation of AI technology. Taiwan Semiconductor Manufacturing Company (TSMC), a key manufacturer of Nvidia’s chips, recently reported stronger-than-expected sales, signaling robust AI-driven demand. Industry-wide, semiconductor sales grew 28% year-over-year in August, according to JPMorgan data, highlighting the sustained appetite for AI-related hardware.
“AI is hot,” said Patrick Moorhead, CEO of Moor Insights and Strategy, predicting sustained growth in the AI data center trade over the coming year. Wall Street’s sentiment is similarly positive, with nearly 90% of analysts covering Nvidia giving a Buy rating on the stock.
Looking Ahead to Nvidia’s Future Prospects
Nvidia’s next significant financial update is slated for November 19, when the company will announce its latest earnings. Analysts expect a strong performance, forecasting $33 billion in revenue—an 82% jump compared to the same period last year. The company’s dominance in AI, alongside strategic partnerships, places it in a favorable position for long-term growth.
As Nvidia continues to shatter records and drive advancements in AI technology, its prospects remain promising. With ongoing heavy investment in AI hardware from major tech players, Nvidia is well-positioned to sustain its place among Wall Street’s elite. The next few months will be crucial as the chipmaker aims to solidify its leadership in the fast-evolving AI landscape.
