Nvidia’s New AI Chip Spurs Stock Surge
Investors’ confidence in Nvidia (NVDA.O) surged as the company’s stock price ascended nearly 2 percent to $901, following an optimistic update from the tech giant’s annual developer conference in San Jose, California. Nvidia’s Chief Financial Officer, Colette Kress, alongside CEO Jensen Huang, engaged with investors, sparking enthusiasm with the announcement of their new flagship AI processor, set to ship later this year.
Amidst a volatile trading day that saw an initial dip of nearly 4 percent, Nvidia’s revelation reversed the trend. Kress confidently stated, “We think we’re going to come to market later this year,” referring to the eagerly anticipated AI chip unveiled on Monday. Huang further bolstered investor sentiment by highlighting the vast potential of the data center market, which he estimates to exceed $250 billion annually, with growth rates up to 25 percent per year.
Nvidia’s strategic pivot from selling individual chips to complete systems could carve out a larger market share within data centers. “Nvidia doesn’t build chips, it builds data centers,” Huang remarked, signaling a broader vision for the company’s role in the tech ecosystem.
The new processor, named Blackwell, is a formidable advancement, boasting a design that integrates two silicon squares—each the size of Nvidia’s previous chips. In addition to hardware, Nvidia introduced a suite of software tools aimed at simplifying the sale of artificial-intelligence models for developers leveraging Nvidia’s platforms.
Collaborating with TSMC (2330.TW), Nvidia is keen to sidestep the packaging bottlenecks that previously hindered shipments. Huang reassured stakeholders, “The volume ramp in demand happened fairly sharply last time, but this time, we’ve had plenty of visibility” into the demand for Blackwell chips.
Despite Wall Street’s anticipation of the B200 Blackwell chip—touted to be 30 times faster at certain tasks than its predecessor—some analysts believe its impact is already reflected in Nvidia’s stock price. Huang disclosed that the Blackwell chip would be priced between $30,000 and $40,000 but later clarified that it would be part of larger computing systems with variable pricing.
As Nvidia continues to navigate its partnerships with South Korean chipmakers, Huang confirmed that they are qualifying Samsung Electronics’ (005930.KS) high bandwidth memory chips. Meanwhile, SK Hynix (000660.KS) announced the commencement of mass production for next-generation HBM3E chips, with initial shipments reportedly destined for Nvidia.
Nvidia’s stock performance has been nothing short of stellar, more than tripling over the past year and positioning it as the third-most valuable company in the US stock market. Currently trading at around 35 times its expected earnings—a notable decrease from a PE ratio of 58 a year ago—the company’s valuation reflects analysts’ increased earnings projections.
Major customers such as Amazon.com (AMZN.O), Google (GOOGL.O), Meta Platforms (META.O), Microsoft (MSFT.O), OpenAI, and Tesla (TSLA.O) are anticipated to adopt Nvidia’s new chip. Morningstar analysts have revised their revenue forecasts for Nvidia’s data-center segment upwards for 2026 and 2028, maintaining that its hardware products will likely continue to lead in the AI industry.
Nvidia’s push into software underscores its commitment to not just providing cutting-edge hardware but also facilitating easier integration of generative AI into various business sectors. Despite predictions of a slight market share decline due to emerging competition and customer in-house chip production, Nvidia’s dominance in the AI chip market appears steadfast.
