Artificial Intelligence Chip Demand Sends Nvidia Shares Soaring
Nvidia’s stock surged nearly 5% on Thursday morning, fueled by CEO Jensen Huang’s remarks on the “insane” demand for the company’s new Blackwell chip, designed for artificial intelligence (AI) functions. The chip is on track to hit the market in Q4, and investment bank J.P. Morgan predicts it will add “several billion” dollars to Nvidia’s sales during the quarter.
The news also boosted Taiwan Semiconductor Manufacturing (TSMC), Nvidia’s contract chip manufacturer, which saw its stock rise 2%. However, rival Intel’s stock took a hit, dropping 0.9% despite recovering from an earlier 3.3% loss.
OpenAI’s recent $6.6 billion funding round, which will be used to accelerate AI software development, is also expected to benefit Nvidia and TSMC. The funding will increase compute capacity, likely leading to increased chip purchases from Nvidia, with TSMC handling production.
Nvidia’s upcoming earnings report on November 19 is highly anticipated, with analysts forecasting a 75% increase in GAAP earnings to $0.65 per share and an 82% rise in sales to $32.9 billion. However, the real focus will be on the company’s Q4 forecast, which could exceed expectations if Blackwell sales continue to surge.
TSMC, trading at a lower valuation than Nvidia, may be a more attractive option for investors. Its diversified customer base, including Intel, could mitigate the impact of any potential Blackwell delays or growth slowdowns.
In contrast, Intel’s high valuation and steady decline in market share make it a less appealing option. The on-time arrival of Blackwell in Q4 could further exacerbate Intel’s struggles.
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