Hello Elephants!
Nvidia’s stock price has been charging upwards, much like a herd on the move, nearing its record high of $135.57. Over the past year alone, Nvidia’s stock has surged by over 185%, and its momentum seems unstoppable. Investors, tech enthusiasts, and Wall Street analysts alike are eyeing this surge, which is largely driven by the company’s Blackwell chip and its growing dominance in artificial intelligence (AI) technologies.
But what exactly is causing Nvidia’s stock to climb to these new heights? Let’s take a look at the factors behind the rise, why analysts are bullish on its future, and what this means for you, the Elephants of the investment world.
The Rise of Nvidia: A Quick Overview
Nvidia’s stock has been performing exceptionally well in 2024. Just in the first week of October, Nvidia’s stock price rose over 4% in a single day, making it the fifth straight day of growth for the tech giant. This spike brings Nvidia close to its record high of $135.57, which was set earlier in June of the same year. At the close of October 8, 2024, Nvidia’s stock was valued at $132.89, up 4.1% from the previous day, according to MarketWatch. The buzz around Nvidia stems largely from its advancements in AI and the explosive demand for its cutting-edge Blackwell chip.
Analysts have high expectations for Nvidia’s stock, predicting significant gains as the company continues to innovate and expand. The impressive stock performance is due in large part to Nvidia’s dominance in the AI sector, which has become one of the fastest-growing industries in the world. Nvidia is a key player in this space, and its leadership has made it a darling of Wall Street.
For our readers new to stock trading, it’s helpful to understand how companies like Nvidia can cause major shifts in market trends. You can explore more about how to invest wisely in the tech sector by reading our guide on long-term investing and value stocks.
Why Nvidia’s Stock Is Climbing: The Blackwell Chip Breakthrough
One of the primary drivers of Nvidia’s recent stock surge is its Blackwell chip platform. This chip represents Nvidia’s latest leap in accelerated computing power and AI capabilities. Announced at Nvidia’s AI Summit, the Blackwell chip has sparked immense interest from both investors and customers alike.
The demand for the Blackwell platform has been described as “insane” by Nvidia’s CEO Jensen Huang, who stated that the company expects to generate billions in revenue from the chip by the start of 2025. In fact, Wall Street estimates that Nvidia’s Blackwell line will contribute around $4 billion in revenue during the January quarter alone, according to MarketWatch.
What makes the Blackwell chip so revolutionary? It’s designed to handle AI workloads with greater speed and efficiency than previous architectures. Nvidia’s GB200 Superchip, a part of the Blackwell family, is already being integrated into AI servers by Foxconn, the world’s largest contract electronics manufacturer. Foxconn is building the world’s largest facility in Mexico to assemble Nvidia’s GB200 chips, which is expected to house over 20,000 GB200 NVL72 servers in 2025, according to Investopedia. Each server is estimated to cost around $3 million, highlighting the massive scale of Nvidia’s AI operations.
Beyond the technical advancements, Nvidia’s decision to diversify its manufacturing footprint is crucial. By expanding into Mexico, Nvidia is reducing its reliance on Taiwan, where political tensions with China pose a potential risk to supply chains. This strategic move gives investors more confidence that Nvidia can meet the skyrocketing demand for AI infrastructure.
For those new to stock trading, understanding how companies like Nvidia diversify their production and grow their market share can be essential to long-term success. Our introductory guide to stock trading can help you get started in navigating these trends.
The Role of Analysts in Nvidia’s Stock Surge
Another major factor contributing to Nvidia’s stock rise is the growing optimism among Wall Street analysts. Analysts have been consistently raising their expectations for Nvidia’s earnings, with several major investment firms predicting that Nvidia will continue to beat market forecasts.
Cantor Fitzgerald analysts are particularly bullish on Nvidia’s stock, predicting that the company’s January 2025 revenue will hit $37 billion, far surpassing the consensus expectations of $36 billion. They believe the Blackwell chip will be the key driver of this revenue growth, as highlighted by The Motley Fool. C.J. Muse, an analyst at Cantor Fitzgerald, has gone so far as to call this Nvidia’s “biggest and baddest product cycle we’ve seen.”
Investors are taking note of this optimism. Hedge funds and long-only investors have been flocking to Nvidia stock in anticipation of these impressive earnings results, according to Mizuho analyst Jordan Klein, who spoke with MarketWatch.
Nvidia’s success is also driven by the broader AI market, which is expected to see significant growth over the next few years. The company’s ability to not only meet but exceed expectations is one reason why it remains a favourite on Wall Street. For investors wondering how much they should invest in Nvidia stock, we have a guide on stock market investments that can help.
Nvidia Surpasses Microsoft: A New Market Giant
As Nvidia continues to surge, it has overtaken Microsoft to become the second-most valuable company in the U.S., with a market cap of $3.26 trillion, according to Investopedia. This milestone is a testament to Nvidia’s growing influence in the tech sector, particularly in AI development.
Nvidia’s stock price has more than doubled in 2024, even after facing a brief slump earlier in the summer due to concerns about a design flaw in the Blackwell chip. However, these concerns were quickly brushed aside as Nvidia unveiled the full capabilities of its Blackwell platform. The demand for Nvidia’s AI chips remains exceptionally high, as companies across industries—from cloud computing to autonomous vehicles—continue to invest heavily in AI infrastructure.
With interest rates falling and spending on AI expected to rise, Nvidia is well-positioned to deliver even more growth in the coming quarters. HSBC analysts have already projected that the demand for AI infrastructure will exceed supply in 2025, giving Nvidia further pricing power and market share dominance, as reported by Investopedia.
For more on other popular stock trends, including the rise of meme stocks, check out our guide on What Are Meme Stocks?.
Why Nvidia’s Surge Matters for Investors
The surge in Nvidia’s stock price underscores the company’s central role in shaping the future of AI and computing. For investors, this presents both opportunities and risks. On the one hand, Nvidia’s dominance in the AI sector means that it is well-positioned to benefit from the growing demand for high-performance computing. On the other hand, the stock’s rapid rise could make it more volatile, especially as competition in the AI space heats up.
Nvidia’s stock has already soared by over 2,500% in the last five years, making it one of the best-performing stocks of the decade. The company’s leadership in AI and its expanding influence in cloud computing, gaming, and data centres ensure that it remains a top pick for growth investors. However, it’s crucial to remember that fast-growing companies like Nvidia can experience sharp swings in stock price. That’s why it’s essential to manage risks carefully.
For those considering adding Nvidia to their portfolio, we recommend reviewing our Top 10 Personal Finance Mistakes to avoid common pitfalls when investing in fast-growing companies.
Looking Ahead: Nvidia’s Future Potential
As we move towards 2025, Nvidia is expected to maintain its leadership in the AI space, driven by the Blackwell chip and
the overall demand for AI infrastructure. Wall Street expects Nvidia to continue delivering impressive revenue results, with projected earnings of $37 billion in Q1 2025 and $41 billion in Q2.
Beyond the Blackwell chip, Nvidia is also making strides in other emerging technologies, such as autonomous driving, gaming, and robotics, which will further boost its growth prospects. For investors in the herd, keeping an eye on Nvidia’s upcoming quarterly earnings and staying informed about its product launches will be key to maximising potential gains.
If you want to track Nvidia’s stock price in real time, you can visit Yahoo! Finance for up-to-date information.
