Nvidia’s Stock Surge: Can It Go All the Way?

by
Victoria d’Este

Published: October 28, 2024 at 8:33 am Updated: October 28, 2024 at 8:33 am

by Ana

Edited and fact-checked:
October 28, 2024 at 8:33 am

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2024 seems to have a sweet ending for Nvidia in store, with the company being only $100 billion away from becoming the world’s most valuable company, putting an end to Apple’s 13-year dominance.

While the signs were there, the rise has left many experts, analysts, and even some government figures in shock. But, How did this come to be? Let’s find out.

A Neck to Neck Race

Few, if any, people could imagine Apple giving the top spot away after taking the title from ExxonMobil back in 2011. But, 2024 has been different, and Apple, Microsoft, and Nvidia have started a neck-to-neck race, with Nvidia being the current leader.

Apple started 2024 strong, just like any other year. By mid-January, though, Microsoft swooped in, leaving Apple behind. Things escalated quickly when Microsoft stretched its lead to $400 billion by March. But then came Nvidia, surprising everyone by snatching the crown from both tech giants by June.

While Apple is still ahead with a $3.5 valuation, Nvidia is only $100 billion short of taking over, something that does not seem impossible, especially given the whopping 19% value boost in October.

Riding the AI Wave

While there are many factors involved in Nvidia’s current growth, many put AI as the number one fuel for this rise. Since OpenAI and ChatGPT made the headlines in 2022, Nvidia has been feeding on the frenzy by selling the “picks and shovels” in the modern gold rush, becoming the most crowded hub for all AI enthusiasts.

Nvidia’s fortune in this dynamic is all due to its masterful Graphic Processing Units (GPUs) that offer unrivaled performance in developing and running different AI solutions. There’s no doubt that to conquer the AI world, companies need to use Nvidia’s technology. 

Just recently, CEO Jensen Huang boasted about the “insane” demand for the Blackwell chip, which is the story of big-name players like Amazon, Google, and Microsoft, all of which are in the market for Nvidia GPUs to push further in this race. The demand has been so high that Nvidia currently controls more than 90% of the market for generative AI chips, practically dominating the sector.

On top of that, Nvidia expects its new Blackwell chip to bring in billions of dollars in revenue by the end of the year. Wall Street analysts have reiterated their buy ratings for Nvidia shares, projecting that Blackwell alone could generate $7 billion in Q4 revenue, contributing to the $130 billion revenue in the fiscal year of 2025. According to JPMorgan, this is, in part, due to the recent boom in the semiconductor sector.

Blackwell on the Way

Lingering issues with Blackwell had caused many to wonder if even Nvidia was following through with the release of this chip. Back in August, KeyBanc suggested that Nvidia had “effectively canceled” this project.

However, Nvidia managed to address the design flaw in its Blackwell chip that was causing low production yields. Some media reports initially pointed fingers at Nvidia’s manufacturing partner, TSMC, but Jensen Huang cleared the air. He openly admitted that the issue was “%100 Nvidia’s fault”.

The good news for the company is that Nvidia has resolved the issue, and production is back on track with help from TSMC. With that hurdle cleared, Nvidia’s stock trajectory looks even more bullish.

AI isn’t the only place where Nvidia dominates. The company has shown signs of a strong presence in both metaverse and gaming. The Omniverse platform is setting the stage for using AR, XR and VR to create immersive 3D environments, offering a next-level experience in the physical realm of the metaverse.

What’s even better for Nvidia is that as the metaverse grows, Nvidia chips become more in demand. Such levels of success have helped the company to perfect its GPUs for gamers around the world, allowing players to get the most satisfaction from top-quality video games. 

Well-Crafted Strategy

Let’s get one thing clear. Nvidia’s current fortune in the AI market is not just a stroke of luck, but an inevitable result of smart decision-making and strategy implementation at different levels. From the Blackwell chip to AR/VR technologies and success in the gaming world, they’ve always been ahead of the curve.

It’ll be interesting to see if Apple can still hold onto the top stop, even though Nvidia is closer than ever and AI is increasingly finding more applications in different sectors. So, it may not be wild to suggest that Nvidia can put an end to Apple’s 13-year dominance.

The $200 Milestone?

Could Nvidia stock hit the $200 point? It’s not out of the question. The company is about 30% away from reaching that stock price, which is not insane given the recent performance of Nvidia. If the trajectory continues as is, Nvidia can hit, or even surpass, the $200 mark in the short term.

At the same time, Generative AI is seeping its way through different sectors, turning many companies into Nvidia customers that look to boost their productivity and profits through Nvidia technologies.

So, if AI is here to stay and grow, the only thing threatening Nvidia’s chances is another company that can take over as the leading source of tech in the AI revolution. But that doesn’t seem to be a likely scenario, at least not in the short run. So, all in all, Nvidia is in a unique position to make its own luck.