$NVIDIA Corp(NVDA)$ stock is on the rise again, closing in on its all-time high. The company has eased market concerns about product delays and long-term growth, boosting investor sentiment.
This month alone, Nvidia shares are up 13%, potentially setting up for a record closing price for the first time since June. It's currently the second-best performer in the $.SPX(.SPX)$ for 2024.
The recent rebound is driven by CEO Jensen Huang's positive updates. After previous delays, Nvidia's new Blackwell chips are now in full production. Huang boldly stated that demand is at a "crazy" level, and Morgan Stanley analysts reported that Blackwell's orders are filled for the next 12 months.
AI Demand Fuels Nvidia's Surge
Major companies, including $Microsoft(MSFT)$ , continue to push their AI initiatives, solidifying Nvidia’s lead in this space. Microsoft’s capital expenditures for the 2025 fiscal year are expected to jump 30% to about $58 billion. TSMC recently reported strong AI sales data, adding to the momentum.
OpenAI’s valuation has soared to $157 billion, further boosting market enthusiasm. Their new reasoning AI model is a critical advancement, driving significant demand for computing power—something Nvidia stands to benefit from. Analysts predict Nvidia's revenue will double this fiscal year, with an additional 44% growth next year.
Options Market Reflects Confidence
The options market is buzzing with activity. On Thursday, investors bought options to lock in over 30 million shares of Nvidia, with strike prices between $150 and $189, expiring in March.
Last Friday, Nvidia closed at $134.80, but these contracts suggest some investors expect even higher prices ahead, particularly after Nvidia’s Q4 earnings report, expected in February.
Strong Performance Ahead
Wall Street is optimistic about Nvidia, with quarterly earnings estimates on the rise. The stock's valuation remains reasonable at a dynamic P/E ratio of around 37.5. While this seems high compared to the $NASDAQ 100(NDX)$ , it’s still below the five-year average and significantly lower than the 44 peak in June.
Despite some concerns about slowing AI spending, the semiconductor industry continues to thrive. According to WSTS and JPMorgan data, semiconductor sales grew 28% year-over-year and 15% month-over-month in August. Looking ahead, Nvidia is set to report earnings on November 19, with Wall Street expecting $33 billion in revenue—an 82% increase.
$Advanced Micro Devices(AMD)$ recently announced its AI chip, Instinct MI325X, planning to start production by the end of 2024. Currently, Nvidia holds over 90% of the data center GPU market, while AMD is striving for a bigger slice. The AI chip market is projected to reach $500 billion by 2028, and AMD aims to capitalize on this growth.
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