(Bloomberg) — Nvidia Corp. investors have high hopes that CEO Jensen Huang’s Monday speech will spark a new breakout in the chipmaker’s stock, which just closed to its first record close since November. .
Bloomberg’s Most Read
Huang will take the stage Monday night at the highly watched CES trade show in Las Vegas. Nvidia has typically used the event to show off consumer devices that use its chips. However, investors will focus today on any comments on the Blackwell chip, considered Nvidia’s next big growth engine. Despite seeing solid demand, Blackwell has faced supply constraints due in part to manufacturing challenges that have slowed its rollout.
“The expectation is that demand for Blackwell will continue to be very strong,” said Matt Cioppa, portfolio manager at Franklin Templeton Equity Group. “That could refocus the market’s attention on the best long-term opportunity for Nvidia.”
Investors have reason to be optimistic. Over the past six months, Huang’s comments on chip demand have boosted shares. In October, he called demand for Blackwell “insane” and in November said the chips are shipping in the current quarter amid “very strong” demand.
The stock 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 gain. 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 close to once again overtaking Apple Inc. as the largest company; The iPhone maker has a market capitalization of $3.7 trillion.
Earnings disappointment
However, shares briefly plunged after Nvidia’s Nov. 20 earnings report. The company’s revenue forecast failed to impress Wall Street, which had become accustomed to projections that beat average estimates by wider margins.
The lull in stocks came as enthusiasm for 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 projected a boom in the market for artificial intelligence components it designs for data center operators. Shares of Marvell Technology Inc. have risen more than 20% since it reported better-than-expected demand earnings for its custom AI chips.
Morgan Stanley analysts led by Joseph Moore compared the rallies in those stocks to a transfer of wealth from Nvidia, whose shares sank for four straight days in the wake of the Broadcom report, losing more than $200 billion in market value.
Nvidia remains a top choice for Morgan Stanley, and analysts say the chipmaker will gain market share this year. They also consider Huang’s keynote speech to be a “positive event.”
“The message should be the same: demand for Blackwell is exceptional, but supply is limited,” they wrote in a research note last month. “At mid-year we feel comfortable that the focus will remain on Blackwell, which will be the driving force of revenue” in the second half of the year.
There is a lot at stake
Jordan Klein, technology sector specialist at Mizuho Securities, sees the CES event and Huang’s keynote as evidence of near-term sentiment and risk appetite toward technology.
If the stock falls or flattens in the days following Huang’s comments, that “in my view would be a modest negative in January,” he wrote. Since tech earnings season won’t begin until later this month, “investors will have little to gauge fundamentals and prospects until then,” he said.
The stakes may be high for Nvidia stock as its rise has heightened valuation concerns. The stock trades at 19 times estimated earnings, making it one of the 10 most expensive components of the Nasdaq 100 index by this metric. It also trades at about 35 times estimated earnings, compared to about 24 times the Philadelphia Stock Exchange Semiconductor Index.
Emily Roland, co-chief investment officer at John Hancock Investments, remains positive on Nvidia and other big tech stocks, but is bracing for “a lot more turmoil” ahead.
“At some point there will be a ‘show me’ moment in 2025 that will have to restate history,” he said. “Valuation is clearly an issue, and it’s important to note how widespread valuation is, even if the AI tailwinds remain intact.”
Top tech stories
Hon Hai Precision Industry Co. reported faster-than-expected 15% revenue growth after Nvidia’s server assembly partner took advantage of sustained demand for AI infrastructure.
An interview with OpenAI co-founder Sam Altman about the first two years of ChatGPT, Elon Musk, and AI under Trump.
Samsung Electronics Co. is expanding its artificial intelligence push with a new set of improvements for its line of premium TVs under the Vision AI brand.
TDK Corp., a major supplier of batteries for Apple Inc.’s iPhones, will launch an upgraded version of its most advanced product this year to help mobile devices keep up with the growing power demands of built-in AI. .
Italy is in advanced talks with Elon Musk’s SpaceX for a deal to provide secure telecommunications for the nation’s government, the largest such project in Europe, people with knowledge of the matter said on Sunday.
Earnings due on Monday
(Updates with closing stock price in fifth paragraph)
