To The Moon

$NVIDIA(NVDA)$'s stock closed at a record high of $149.43 on January 6, 2025. The 3% surge is in anticipation of CEO Jensen Huang's keynote speech at CES 2025. The event, historically a platform for NVIDIA to unveil groundbreaking advancements, could catalyse a breakout above $150. With NVIDIA leading the AI revolution and leveraging its robust ecosystem, CES presents a potential inflection point for its stock. This report evaluates the strategic drivers behind NVIDIA's momentum and offers recommendations on positioning for potential gains.

The CES Catalyst: Jensen's Vision and Market Expectations

1. Historical CES Influence: NVIDIA has a track record of using CES as a launchpad for its innovations, from new GPU architectures to AI-driven platforms like Omniverse. The market eagerly anticipates similar announcements, particularly around advancements in the Blackwell chip series, autonomous vehicles, and edge AI. Any major unveiling could bolster NVIDIA's perceived leadership and drive stock performance higher. Conversely, a lack of significant announcements might trigger profit-taking.

2. AI Leadership Reinforcement: Investors expect Huang to solidify NVIDIA's dominance in AI infrastructure, which underpins the growth of large language models, generative AI, and industrial applications. Should NVIDIA unveil enhancements to its AI stack or partnerships, the stock could gain further momentum.

Key Announcements from Jensen Huang's CES 2025 Keynote

During his keynote at CES 2025, Jensen Huang introduced significant advancements across gaming, artificial intelligence (AI), robotics, and automotive technologies:

1. GeForce RTX 50 Series and DLSS 4: Huang unveiled the GeForce RTX 50 Series GPUs, based on the new Blackwell architecture. These GPUs feature DLSS 4, an AI-driven technology capable of generating multiple frames per rendered frame, enhancing rendering efficiency and performance. The RTX 50 Series boasts 4,000 AI TOPs, 280 teraflops of ray tracing performance, 92 billion transistors, and G7 memory with a bandwidth of 1.8 TB/s. Pricing starts at $549 for the RTX 5070, up to $1,999 for the RTX 5090, with laptops featuring these GPUs available from March 2025.

2. Physical AI and Robotics: Emphasizing "physical AI," Huang discussed NVIDIA's initiatives in robotics, including the development of a billion humanoid robots and millions of automated factories and self-driving vehicles. He introduced Cosmos, a series of foundational AI models designed to train humanoids, industrial robots, and autonomous vehicles, aiming to enhance their interaction with the physical world.

3. Automotive Partnerships: NVIDIA announced a collaboration with Toyota to equip next-generation vehicles with NVIDIA's Drive AGX Orin supercomputer and DriveOS operating system, enhancing the capabilities of autonomous driving systems.

4. AI Agents and Industry Impact: Huang highlighted the emergence of AI agents, referring to them as a "multi-trillion-dollar industry." NVIDIA plans to offer models and frameworks to support businesses in developing AI-driven applications, underscoring the transformative potential of AI across various sectors.

Current Stock Dynamics: Why $150 Matters

NVIDIA's stock breaking above $150 would mark a psychological and technical milestone, potentially triggering a wave of buying from momentum traders and institutional investors. Key factors include:

1. Technical Breakout Potential: The $150 resistance level has been a critical barrier, with NVIDIA's recent rally testing it. A sustained move above $150 could set the stage for a new high, potentially reaching Morgan Stanley's price target of $166. The upward momentum is supported by strong relative strength and bullish sentiment.

2. Earnings Momentum: NVIDIA's recent earnings have consistently exceeded expectations, driven by data centre demand and AI growth. CES announcements could reinforce its earnings narrative, further supporting upward stock movement.

3. Options Market Activity: Options flow indicates heavy interest in NVIDIA's $150 calls, suggesting market participants are betting on a breakout. This speculative activity could amplify volatility around CES.

The Bullish Case: Why NVIDIA Could Soar

1. Innovation Pipeline: If Jensen unveils significant advancements in the Blackwell series, the Omniverse platform, or AI hardware, NVIDIA could extend its competitive edge. This innovation, coupled with strong pricing power, underpins the case for further stock appreciation.

2. Expanding Addressable Markets: NVIDIA is increasingly diversifying beyond semiconductors into areas like automotive AI, gaming, and cloud services. These high-growth sectors provide a cushion against potential macroeconomic headwinds.

3. Institutional Confidence: Analysts and institutional investors continue to favour NVIDIA as a top pick, with bullish price targets signalling confidence in its long-term prospects.

The Bearish Case: Risks to Watch

1. Valuation Pressures: NVIDIA's current valuation reflects significant growth expectations. Any failure to deliver meaningful CES announcements could result in a pullback, particularly as investors reassess its premium multiples.

2. Macroeconomic Uncertainty: Higher interest rates, geopolitical risks, or weakening demand in key markets could weigh on NVIDIA's performance. Additionally, regulatory concerns around AI adoption could introduce uncertainty.

3. Profit-Taking Risk: Following a 3% surge, NVIDIA's stock may face selling pressure from investors looking to lock in gains, especially if CES announcements don't meet high expectations.