Prediction: This 1 thing will help Nvidia stock rise in the fourth quarter

Nvidia (NVDA 2.18%) shares have surged higher over the past few years on the company’s dominance of the artificial intelligence (AI) chip market — it holds more than 80 percent share. But recently, the stock has lost some of its momentum, falling more than 6% in the past month. Some investors have worried about increased competition in the chip market, and others worry that any slowdown in AI spending could hurt the company.

In my opinion, these concerns are overblown and Nvidia still has plenty of fuel in the tank to climb both in the short term and over time. My prediction is that one thing in particular will help Nvidia stock rise in the fourth quarter, and the recent loss of momentum is only temporary. Let’s delve into this technology story that still has plenty of exciting chapters ahead.

Image source: Getty Images.

Nvidia’s path from gaming to AI

Just a few years ago, the biggest source of income for this tech giant was the gaming industry. Nvidia’s graphics processing units (GPUs) fueled all the action, thanks to their ability to handle multiple tasks simultaneously. It soon became clear that this profile made the GPU perfect for other uses, including AI.

Nvidia has turned its attention to this high-growth area, and its earnings have taken off, climbing into triple digits quarter after quarter. Today, Nvidia’s data center business — the one that serves AI customers — accounts for 87 percent of the company’s total quarterly revenue. This will continue given the massive demand Nvidia is seeing and overall growth forecasts for the AI ​​market, which is expected to expand from $200 billion today to over $1 trillion by 2030.

Of course, there are competitors, but Nvidia is one step ahead when it comes to innovation. It also plans to update its GPUs annually, which should keep it in this top position. On the subject of AI spending, my colleague Trevor Jennewine recently wrote about how AI spending may gain more momentum in the coming years, which is great news for Nvidia.

Now on to my prediction. Yes, Nvidia stock has underperformed in recent weeks, but it’s important to put that in perspective. The stock is still up 144% this year and is up 2,700% over the past five years.

“Several billion dollars” in new revenue

My prediction is that this is a break in the action, and in the fourth quarter, sales of Nvidia’s new Blackwell architecture will help the stock move higher. Nvidia said during its most recent earnings call that it plans to ramp up Blackwell production in the fourth quarter and that it will see “several billion dollars” in revenue from it during that period.

Nvidia won’t report fiscal fourth-quarter earnings until early next year, but any communication from the company about Blackwell’s launch or market talks could come much sooner — and investors are known to react to any news. All of this may equate to a strong performance for Nvidia stock in the fourth quarter of this year, as investors consider the company’s message during its latest earnings call — and look ahead to Blackwell’s contribution in its upcoming fourth-quarter report.

It’s important to remember that Nvidia Chief Executive Officer (CEO) Jensen Huang has said that demand for Blackwell has outstripped supply and expects that to continue into next year, so it’s clear that customers are rushing to get in on the this new platform. I recently wrote about how two major tech players begged Huang for more GPUs, further illustrating how eager customers are to get Nvidia chips.

All of this makes me confident in Nvidia’s long-term revenue potential in the AI ​​market, and the potential for its stock to rise over time as well, whether my short-term prediction is correct or not. That means Nvidia is still a great stock to buy and hold for the long term.