NVIDIA's relentless rally: AI chip giant eyes new heights
NVIDIA's stock continues its meteoric rise, fuelled by insatiable demand for AI chips. Here's why analysts remain bullish on the semiconductor powerhouse.
NVIDIA's stock on a tear: Breaking down the numbers
NVIDIA's shares have been on an absolute tear, with the stock price climbing an impressive 4% on Tuesday alone. This marked the fifth consecutive day of gains for the semiconductor giant, underlining the market's unwavering confidence in its growth trajectory.
The numbers are truly staggering. Over the past week, NVIDIA's stock has surged nearly 14%, bringing its year-over-year (YOY) gains to a jaw-dropping 190%. This remarkable performance has propelled the company's valuation to dizzying heights, with its market capitalisation now sitting at a cool $3.19 trillion.
This latest rally has seen NVIDIA reclaim its position as the second-largest company by market cap, leapfrogging Microsoft and now trailing only Apple's $3.4 trillion valuation. It's a testament to the company's dominant position in the AI chip market and its ability to capitalise on the surging demand for artificial intelligence (AI) technologies.
As NVIDIA approaches its all-time high of $135.58, set in June, investors and analysts alike are watching closely to see if the stock can break through this barrier and set new records.
Wall Street's bullish stance: Analysts see more room for growth
Wall Street's enthusiasm for NVIDIA shows no signs of waning, with multiple analysts reiterating their 'Buy' ratings on the stock this week. The bullish sentiment is driven by the company's strong performance and its pivotal role in the AI revolution.
KeyBanc, for instance, has raised its fiscal year 2025 sales forecast for NVIDIA to an eye-watering $130.6 billion, surpassing the consensus estimates. This optimistic projection underscores the firm's confidence in NVIDIA's ability to maintain its growth trajectory and capitalise on the booming demand for AI chips.
Analysts are particularly excited about the potential for significant earnings beats in the coming quarters. With NVIDIA's new Blackwell chips generating what CEO Jensen Huang described as "insane" demand, and the previous generation H100 and H200 chips still seeing robust sales, the company appears well-positioned to exceed expectations.
Moreover, Cantor Fitzgerald has named NVIDIA its "Top Pick " in the semiconductor sector, citing the company's "best upside to consensus" estimates. This vote of confidence from a respected Wall Street firm further cements NVIDIA's status as a market leader.
The AI chip revolution: Driving NVIDIA's success
At the heart of NVIDIA's success lies its dominance in the AI chip market. The company's graphics processing units (GPUs) have become the de facto standard for training and running large language models and other AI applications, putting NVIDIA at the forefront of the AI revolution.
The demand for NVIDIA's AI chips shows no signs of slowing down. CEO Jensen Huang's recent comments about the "insane" demand for the new Blackwell chips highlight the voracious appetite for cutting-edge AI hardware. This insatiable demand is not limited to the latest chips, with the previous generation H100 and H200 chips also experiencing strong sales.
In a further testament to NVIDIA's market position, Foxconn has announced plans to build the "world's largest factory" dedicated to assembling NVIDIA AI servers. This move underscores the scale of demand for NVIDIA's products and the company's central role in the AI ecosystem.
The broader semiconductor industry is also experiencing strong growth, with sales up 28% year-over-year in August. However, NVIDIA stands out as a clear leader in this booming sector, thanks to its focus on AI and high-performance computing.
Beyond hardware: NVIDIA's expanding AI ecosystem
While NVIDIA's hardware remains its core strength, the company is increasingly showcasing its AI software capabilities. This expansion beyond chips demonstrates NVIDIA's commitment to building a comprehensive AI ecosystem and further entrenching its market position.
By developing software solutions that complement its hardware offerings, NVIDIA is creating a more integrated and attractive proposition for customers. This strategy not only helps to drive hardware sales but also opens up new revenue streams and strengthens the company's competitive moat.
The combination of cutting-edge hardware and sophisticated software solutions positions NVIDIA as a one-stop shop for organisations looking to implement AI technologies. This holistic approach is likely to be a key driver of the company's growth in the coming years.
Looking ahead: Catalysts for continued growth
Several positive catalysts are driving optimism about NVIDIA's future prospects. One potential growth driver is the anticipation of a new wave of AI startup funding. As more capital flows into the AI sector, demand for NVIDIA's chips is likely to increase further, fuelling the company's growth.
The launch of the Blackwell chip is viewed as a major growth driver for the coming quarters. With its advanced capabilities and strong demand, this new generation of AI chips could help NVIDIA maintain its market leadership and drive significant revenue growth.
Furthermore, the overall strength of the semiconductor industry provides a favourable backdrop for NVIDIA's continued success. As AI adoption accelerates across various sectors, the company is well-positioned to capitalise on this growing market.
NVIDIA stock price – technical analysis
NVIDIA's stock price fell by more than a third in July and August, but it has steadily recovered over the last two months, having found a low in the first weeks of August.
The latest surge has put the price on course back to the June record highs, and a break to new record highs seems like a distinct possibility. Higher lows in early September and early October provide further reinforcement of the uptrend.
NVIDIA share price chart
How to invest in NVIDIA shares
If you're considering investing in NVIDIA shares, here's a step-by-step guide to get you started:
- Do your research on NVIDIA, including its financial performance, growth prospects, and potential risks.
- Open a share dealing account with IG, which allows you to buy and sell shares directly.
- Search for NVIDIA (ticker: NVDA) in our trading platform or mobile app.
- Choose the number of shares you'd like to buy or the amount of money you want to invest.
- Place your trade and monitor your investment.
Remember, while NVIDIA's recent performance has been impressive, all investments carry risk. It's essential to diversify your portfolio and only invest what you can afford to lose.
As NVIDIA continues its remarkable run, driven by the insatiable demand for AI chips and strong analyst forecasts, it remains a stock to watch in the ever-evolving tech landscape. With its dominant market position and continued innovation in both hardware and software, NVIDIA is well-positioned to capitalise on the AI revolution and potentially deliver further growth for investors.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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