2 Reasons NVIDIA Stock Popped Yesterday With More Room to Run

NVIDIA Corporation’s remarkable journey, fueled by the AI revolution, recently faced a roadblock due to antitrust concerns. However, a glimmer of hope emerged as news of a potential U.S.-Saudi Arabia deal involving NVIDIA’s chips and promising remarks by CEO Jensen Huang spurred an 8.2% surge in the company’s stock during Wednesday’s trading session.

A Promising Uplift

Despite recent setbacks, NVIDIA’s stock witnessed a significant uptick, raising the question – can this positive momentum continue, propelling the company to greater heights?

Potential U.S.-Saudi Deal

Reports indicate that the U.S. government is contemplating permitting NVIDIA to export its advanced chips to Saudi Arabia. This move could unlock new revenue streams for NVIDIA, especially with the Middle Eastern nation showing interest in leveraging sophisticated AI models powered by NVIDIA’s H200 chips.

The uplift of restrictions on advanced semiconductor sales could pave the way for substantial revenue growth for NVIDIA, riding on the surge in global semiconductor sales which reached $51.3 billion in July, marking an 18.7% increase year-over-year according to the Semiconductor Industry Association.

Encouraging Blackwell Updates

CEO Jensen Huang’s positive outlook on the production of Blackwell chips, showcased at a recent technology conference, has bolstered investor confidence. Shipments of these cutting-edge chips are expected to ramp up significantly in the fourth quarter to meet escalating demand.

The Blackwell chips have already garnered significant interest, with tech giants like Alphabet Inc., Microsoft Corporation, Meta Platforms, Inc., and Amazon.com, Inc. vying for these powerful chips due to their enhanced capabilities, showcasing NVIDIA’s continued innovation and relevance in the market.

Supremacy in the GPU Market

NVIDIA’s stronghold in the GPU market, with over 80% market share, positions the company for further growth. Huang’s recent affirmation of the increasing data transfer to GPUs bodes well for NVIDIA, especially as the AI industry gains traction. The dominance in GPU technology aligns with the projected growth of the AI industry to $1,339.1 billion by 2030.

NVIDIA’s GPU prowess has translated into stellar financial performance, including a notable uptick in data center GPU revenues, overshadowing its competitors in the sector.

Potential Price Upside

With potential ease in chip sales restrictions, enhanced Blackwell production, and unrivaled positioning in the GPU segment, NVIDIA’s stock seems poised for further appreciation.

Analysts have already revised the short-term price target for NVIDIA upwards, with significant potential for the stock to soar. Additionally, the stock has been trading above its 200-day moving average, signaling a prolonged uptrend.

Despite these positive indications, NVIDIA’s stock currently holds a Zacks Rank #3 (Hold), hinting at cautious optimism among investors.

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