(Bloomberg) — Nvidia Corp. investors have high hopes that Monday’s speech from CEO Jensen Huang will spark a fresh breakout within the chipmaker’s shares, which just ended at their first record close since November.
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Huang is about to take the stage Monday evening on the closely-watched CES trade show in Las Vegas. Nvidia has typically used the event to showcase consumer devices using its chips. Nevertheless, investors will focus today on any commentary on the Blackwell chip, considered Nvidia’s next major growth driver. Despite seeing robust demand, Blackwell has faced supply constraints due partly to manufacturing challenges which have slowed its rollout.
“The expectation is that Blackwell demand stays very strong,” said Matt Cioppa, a portfolio manager at Franklin Templeton Equity Group. “That might bring the last word longer-term opportunity for Nvidia back into focus for the market.”
Investors have reasons to be optimistic. Over the past six months, Huang’s comments about demand for the chips have boosted the stock. In October, he called Blackwell demand “insane,” and in November he said the chips are shipping in the present quarter amid “very strong” demand.
The shares posted a monthly loss in December, but still gained 171% in 2024, making them by far the largest single driver of the S&P 500 Index’s overall gain. The stock is already up 11% this yr, including a gain of three.4% on Monday. With a market capitalization of $3.66 trillion, it’s near re-overtaking Apple Inc. as the biggest company; the iPhone maker has a market cap of $3.7 trillion.
Earnings Disappointment
Yet the stock briefly slumped after Nvidia’s Nov. 20 earnings report. The corporate’s revenue forecast did not impress Wall Street, which had develop into accustomed to projections that topped average estimates by wider margins.
The lull within the shares has come as excitement about AI spending has spread to other areas of the semiconductor industry.
Broadcom Inc. shares have soared greater than 30% prior to now few weeks after the chipmaker projected a boom available in the market for AI components that it designs for data-center operators. Marvell Technology Inc. shares have rallied greater than 20% because it reported better-than-forecast earnings on demand for its custom AI chips.
Morgan Stanley analysts led by Joseph Moore likened the rallies in those stocks to a wealth transfer from Nvidia, whose shares sank for 4 consecutive days within the wake of Broadcom’s report, shedding greater than $200 billion in market value.
Nvidia stays a top pick at Morgan Stanley, with the analysts arguing that the chipmaker will take market share this yr. They’re also trying to Huang’s keynote to be a “positive event.”
“The messaging ought to be the identical — Blackwell demand is phenomenal, but supply constrained,” they wrote in a research note last month. “By mid-year we remain comfortable that the main focus will remain on Blackwell, which will likely be the driving force behind revenue” within the second half of the yr.
High Stakes
Jordan Klein, a tech-sector specialist at Mizuho Securities, sees the CES event and Huang’s keynote as tests of near-term sentiment and risk appetite toward tech.
If the stock drops or treads water in the times following Huang’s remarks, that “could be a modest negative for my part into January,” he wrote. For the reason that tech earnings season won’t begin until later this month, “investors may have little to measure fundamentals and outlooks until then,” he said.
The stakes for Nvidia shares could also be elevated, as its surge has heightened valuation concerns. The stock trades at 19 times estimated revenue, making it one in all the ten costliest Nasdaq 100 Index components by this metric. It also trades near 35 times estimated earnings, compared with about 24 for the Philadelphia Stock Exchange Semiconductor Index.
Emily Roland, co-chief investment strategist at John Hancock Investments, stays positive on Nvidia and other large technology stocks, but is bracing for “lots more choppiness” ahead.
“Sooner or later there may be going to be a ‘show me’ moment in 2025 that’s going to need to reaffirm the story,” she said. “Valuation is clearly a problem, and it can be crucial to notice how prolonged the valuation is, even when the AI tailwinds remain intact.”
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Earnings Due Monday
(Updates with closing share price in fifth paragraph)