Nvidia CEO bombshell raises bar for stock

Consider how the Nvidia GeForce 8800 chip, released in 2006, changed the gaming landscape. Now, nearly two decades later, Nvidia is still making that progress, with its Blackwell designed to change the world of artificial intelligence.

The demand is “crazy,” Nvidia Chief Executive Jensen Huang said recently. Major cloud providers such as AWS, Azure and Google Cloud are integrating Blackwell into their infrastructure to support high-performance AI workloads.

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Oracle announced on October 2 that it will need 131,072 Nvidia Blackwell GPUs as part of a $6.5 billion investment to establish a new public cloud region in Malaysia, further evidence of the strong need for the capabilities advanced AI processing.

Blackwell is a platform launched by Nvidia in March that enables organizations to run real-time generative AI on models with trillions of parameters. These large language models are trained on extensive data sets to understand and generate responses in human language.

“Blackwell is in full production,” Huang said in an interview with CNBC. “The demand for Blackwell is insane. Everyone wants to have the most and everyone wants to be first.”

Nvidia shares are up more than 150% this year, after an impressive 240% gain in 2023.

Hyperscaler buyers like Amazon (AMZN) Microsoft (MSFT) and the Alphabet (GOOGLE) is expected to spend about $160 billion in 2024 on AI infrastructure, according to Bernstein analysts. Blackwell’s cost is expected to be between $30,000 and $40,000 per unit.

Huang emphasized the importance of continuous updates to Nvidia’s AI infrastructure, with the company releasing new platforms annually. “If we can increase performance like we did for Hopper and Blackwell … we’re effectively increasing revenue or production for our customers on these infrastructures by a few to three times every year,” Huang added.

Nvidia’s financial performance beats expectations

Nvidia’s latest earnings report further solidifies its strong position in the AI ​​market.

On Aug. 28, the company reported earnings per share of 68 cents, beating Wall Street expectations of 64 cents. Revenue reached $30.04 billion, up 122%, beating the $28.7 billion forecast.

Nvidia estimates revenue of $32.5 billion for the current quarter, an 80% increase from last year.

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Nvidia plans to ship Blackwell GPUs to customers in Q4 of this year, with a consumer launch expected in 2025. “In the fourth quarter, we expect to deliver several billion dollars in Blackwell revenue,” said Nvidia CFO Colette Kress in August. winning call.

Shares of Nvidia are up more than 150% this year after an impressive 240% gain in 2023. The company is now worth more than $3 trillion, one of the most valuable companies in the world behind Apple and Microsoft.

The analyst sees growth and a “compelling” rating for Nvidia

JPMorgan remains bullish on Nvidia’s prospects, maintaining an overweight rating and a $155 price target, thefly.com reported.

“Nvidia remains on track to deliver its next-generation Blackwell GPU platform in high-volume production in Q4,” the analyst told investors in a research note dated Oct. 2, adding that investors should not don’t pay too much attention to the recent sell-side noise on shelf portfolio changes.

Nvidia is stopping development of the GB200-based dual-rack 72-way NVL36×2, TF International Securities analyst Ming-Chi Kuo said on Oct. 1.

Last month, Bank of America reiterated a buy rating and a $165 price target on Nvidia, which the firm also calls a top pick in the sector.

The firm warned of several near-term headwinds, including Blackwell’s delay and gross margin pressure, a potential DOJ probe, competition, AI monetization, cloud capital, weak seasonality and the US election.

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However, this could also create a buying opportunity. The stock is trading in its lowest valuation quartile in five years, the analyst said.

The firm points to Nvidia’s “compelling growth” and says upcoming supply chain updates over the next few weeks will confirm Blackwell product shipments, which it sees as the main driver for a turnaround.

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