Nvidia’s CEO says demand for its new chips is “insane.” Is it time to buy the stock?

Nvidia (NVDA 1.69%) has been one of the best-performing stocks over the past few years as demand has skyrocketed for its graphics processing units that help build artificial intelligence (AI) infrastructure.

The company is used to seeing high demand for its products, so it was notable when, in a recent CNBC interview, CEO Jensen Huang called demand for chips based on its new Blackwell architecture “crazy.”

Let’s take a closer look at Huang’s comments and what they could mean for stocks.

Blackwell’s “crazy” request

Blackwell is Nvidia’s newest graphics processing unit (GPU) architecture. The company introduced it earlier this year, saying it’s the world’s most powerful chip and will help customers run their generative AI large language models (LLMs) in real-time at much lower cost and power consumption than predecessor chips .

Huang told CNBC that after an initial delay due to a minor design flaw that affected production, the Blackwell is in full production and going according to plan.

He then explained why the company decided to accelerate the pace of its innovation cycle to once a year, saying that if it can increase performance two to three times a year, it will increase revenue and reduce costs and energy consumption for its customers every year. .

This will no doubt benefit Nvidia as well. It will keep it at the forefront of a fast-moving technology while maintaining high demand and pricing power. The company has already announced its next GPU architecture, called Rubin, scheduled for 2026.

At an estimated cost of $30,000 to $40,000 per chip, the “insane” demand for Blackwell bodes very well for the company. When he introduced the technology, he said a number of leading technology companies were already ready to adopt Blackwell, including Alphabet, amazon, della, Meta platforms, microsoft, OpenAI, Oracle, adzeand xAI. There are a lot of big companies vying for Nvidia’s latest GPUs.

Image source: Getty Images.

Demand is unlikely to slow

Based on the actions of Nvidia’s customers, it doesn’t look like demand for its GPUs will slow down anytime soon.

For example, Oracle Executive Chairman Larry Ellison was asked on the company’s second quarter earnings call whether demand for computing power will slow if there is a transition from AI training to AI inference. He responded that there is likely no end in sight in the next five to 10 years for demand as companies battle for technical AI supremacy. His company, for example, plans to double its own capital expenditures (capex) for the 2025 fiscal year, which ends in May.

Meanwhile, Alphabet and Meta Platforms said there is more risk in underinvesting in AI infrastructure than overinvesting. Both companies are spending heavily on AI-related investments, with Meta already saying it expects its 2025 budget to be significantly higher than in 2024.

Cloud computing leaders Amazon and Microsoft are pouring money into data centers to keep up with AI demand, while startups OpenAI and xAI are spending a lot of money to develop more advanced AI models.

This race for more sophisticated AI models creates the need for exponentially more computing power to train them. This power is provided by GPUs, which were most likely designed by Nvidia.

For example, Meta says its Llama 4 LLM would likely need 10 times as many GPUs as its predecessor Llama 3, while the xAI Grok-3 AI model requires five times as many GPUs to to be trained than Grok-2.

Is Nvidia stock a buy?

All of this points to the need for more GPUs in the future. In the global race for ever-increasing computing power, no company is better positioned than Nvidia. In addition to the dominance of its chips, there is also the wide moat created by its CUDA software, which long ago became the de facto platform for programming GPUs.

At the same time, the stock is still reasonably priced despite its parabolic performance in recent years. Trading at a forward price-to-earnings (P/E) ratio of around 31 based on next-year analyst estimates and a price-to-earnings-growth (PEG) ratio of 0.87, the stock is attractively priced given the demand that seems to be still ahead for its GPUs. A PEG below 1 is usually viewed as undervalued, and growth stocks will often have PEGs well above 1.

NVDA PE Ratio data (Before 1y) by YCharts.

As Nvidia talks up crazy demand for Blackwell chips and its customers continue to ramp up their AI spending, the stock remains a buy.