Nvidia’s AI Surge: Is the Growth Just Beginning?

Nvidia (NASDAQ: NVDA) is at the forefront of an AI-driven transformation in technology. Its impressive stock performance showcases just how much the demand for artificial intelligence is accelerating.

Understanding Nvidia’s Recent Stock Surge

In recent weeks, Nvidia’s stock has risen over 20%. While investors generally consider a 20% annual increase to be significant, Nvidia has achieved this impressive gain in just five weeks.

The driving force behind this surge? A breakthrough product called Blackwell. In a recent CNBC interview, CEO Jensen Huang described the demand for the Blackwell AI chip as “insane,” emphasizing that companies want to be the first to adopt new technologies.

When Nvidia launched its Blackwell GPU in March 2024, it promised to “power a new era of computing.” The performance benefits are substantial; Blackwell can run large language models (LLMs) with 1 trillion parameters while using up to 25 times less energy and cost than the existing Hopper platform. Major customers like Alphabet, Amazon, Meta Platforms, Microsoft, Oracle, and OpenAI are already on board with this new architecture.

Despite these gains, Nvidia’s stock faced some turbulence after news emerged that the U.S. might limit exports of advanced AI chips to certain countries.

Why Analysts Expect Continued Growth for Nvidia

Analysts remain optimistic about Nvidia’s future. The average target price for the company suggests a potential increase of nearly 14% in the next year, with some believing it could rise by as much as 55% over the same period.

Even though enthusiasm has tempered slightly, Nvidia retains considerable support among financial analysts. In a September survey of 60 analysts, 55 rated Nvidia as a “buy” or “strong buy.” However, in October, out of 38 analysts surveyed, 22 maintained this positive outlook.

The ongoing forecast for Nvidia’s success largely stems from its unmatched position in the AI chip market. Despite competition, Nvidia’s graphics processing units (GPUs) are still viewed as the best for training and operating AI models.

Morgan Stanley noted the remarkable demand for Blackwell GPUs, stating they are sold out for the next year. Analyst Joseph Moore remarked that all signs indicate that the AI investment cycle is only just beginning. Morgan Stanley has labeled Nvidia a “Top Pick.”

Will Wall Street’s Predictions Hold True?

Time will determine whether Nvidia’s anticipated 14% growth over the next year will be realized. Some analysts believe this estimate may be conservative.

Nvidia has not yet disclosed sales figures for its Blackwell chips. As more data comes in, it’s likely that price targets for the stock could be revised upward.

The AI revolution, as highlighted by Moore from Morgan Stanley, is still in its infancy, positioning Nvidia as a key player for an extended period.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook, is also a member of the board. John Mackey, a former CEO of Whole Foods Market, is a current board member. Keith Speights holds positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Oracle.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.