(Bloomberg) – Nvidia Corp. Investors Many are hoping that CEO Jensen Huang’s Monday speech will trigger another breakout in the chipmaker’s shares, which just finished at their first record close since November.
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Huang is expected to take the stage Monday evening at the popular CES show in Las Vegas. Nvidia has generally used the event to showcase consumer devices using its chips. However, investors today will focus on any comments on the Blackwell chip, seen as Nvidia’s next major growth engine. Despite robust demand, Blackwell has faced supply constraints due in part to manufacturing challenges that have slowed its rollout.
“Demand for Blackwell is expected to remain very strong,” said Matt Cioppa, portfolio manager at Franklin Templeton Equity Group. “This could bring Nvidia’s ultimate long-term opportunity to the market again.”
Investors have reason to be optimistic. Over the past six months, Huang’s comments on demand for chips have boosted the stock. In October, he called Blackwell’s demand “crazy” and in November he said the chips would ship in the current quarter amid “very strong” demand.
The shares posted a monthly loss in December, but still gained 171% in 2024, making it by far the biggest driver of the S&P 500’s overall rise. The stock is already up 11% this year, including a 3.4% gain on Monday. With a market capitalization of $3.66 trillion, it is poised to overtake Apple Inc. as the largest company; the iPhone maker has a market capitalization of $3.7 trillion.
Disappointment of winnings
Still, the stock briefly fell after Nvidia’s earnings release on November 20. The company’s revenue forecasts failed to impress Wall Street, accustomed to projections far exceeding average estimates.
The stock market lull came as enthusiasm over AI spending spread to other areas of the semiconductor industry.
Shares of Broadcom Inc. have soared more than 30% in recent weeks after the chipmaker forecast a boom in the market for AI components it designs for data center operators. Shares of Marvell Technology Inc. have risen more than 20% since it reported better-than-expected earnings thanks to demand for its custom AI chips.
Morgan Stanley analysts, led by Joseph Moore, likened the rise in those stocks to a wealth transfer from Nvidia, whose shares fell for four straight days following the Broadcom report, losing more than $200 billion. in market value.
Nvidia remains a top pick at Morgan Stanley, with analysts saying the chipmaker will take market share this year. They also expect Huang’s keynote speech to be a “positive event.”
“The message should be the same: Blackwell demand is exceptional, but supply is limited,” they wrote in a research note last month. “By mid-year, we remain confident that the focus will remain on Blackwell, which will be the driving force of revenue” in the second half.
High stakes
Jordan Klein, a technology sector specialist at Mizuho Securities, sees the CES event and Huang’s keynote as tests of near-term sentiment and risk appetite toward technology.
If the stock falls or stalls in the days following Huang’s remarks, it “would be a slight negative outcome for January in my opinion,” he wrote. Since tech earnings season doesn’t begin until later this month, “investors won’t have much to gauge fundamentals and prospects by then,” he said.
The stakes for Nvidia shares could be high, as their rise has increased valuation concerns. The stock trades at 19 times estimated revenue, making it one of the 10 most expensive Nasdaq 100 Index constituents by that measure. It also trades for nearly 35 times estimated earnings, compared to about 24 times for the Philadelphia Stock Exchange Semiconductor Index.
Emily Roland, co-chief investment strategist at John Hancock Investments, remains positive on Nvidia and other big tech stocks, but prepares for “a lot more turbulence” to come.
“At some point there will be a ‘show me’ moment in 2025 that will have to reaffirm history,” she said. “Valuation is clearly an issue, and it’s important to note how widespread valuation is, even if the AI tailwinds remain intact.”
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(Updates with closing stock price in fifth paragraph)
