Over the past month, Nvidia shares have risen 25% and are close to record values. This happened against the backdrop of investors expecting reports from major technology companies such as Meta✴, Microsoft and Alphabet, which will soon talk about their development in the field of AI. This data could have a significant impact on Nvidia’s position, given its key role in the market for graphics processing units (GPUs) used to train and run AI.
Image source: NVIDIA
Nvidia shares hit $132.65 on Wednesday, just off their June high of $135.58. The rise in shares occurred after their short-term but significant fall in late August and early September of this year. This allowed the company to overtake Microsoft and take second place in market capitalization, second only to Apple. Nvidia remains the largest GPU supplier in the world. Companies such as Meta✴, OpenAI, Alphabet, Microsoft and Oracle continue to introduce new AI developments that require significant investments in GPU power, further fueling demand for Nvidia products.
In August, Nvidia reported results for the second quarter of the current fiscal year, showing revenue growth of 122% year over year, and the company’s net income doubled to more than $16.6 billion. The company provided a more optimistic forecast for the current quarter than expected and reported plans to ship next-generation Blackwell AI chips worth several billion dollars. Shipments of the current generation of Hopper chips are also expected to increase over the next two quarters, indicating stable and strong demand for Nvidia products.
Dynamics of Nvidia shares from June 1 to October 10, 2024. Image source: TradingView
Analysts at Mizuho believe Nvidia will retain its leadership in the market for AI GPUs used in data centers. They estimate Nvidia’s market share to be around 95%. Analysts set a target price for the company’s shares at $140, but noted risks associated with possible export restrictions in relation to China, geopolitical tensions around Taiwan and a possible decrease in spending on server capacity for AI.
Nvidia CEO Jensen Huang told CNBC that demand for Blackwell chips is extremely high: “Everyone wants to have more, and everyone wants to be first.” Production of these GPUs, which cost between $30,000 and $40,000 apiece, will begin in the fourth quarter and continue until 2026.
In addition to the reasons stated, the dynamics of the stock price were also affected by the completion of the sale of shares by Huang himself, which became known from a document published on September 23. As a result, Nvidia shares rose 4% in just one day. This event further strengthened the company’s position against the backdrop of a general upward trend.