Elon Musk`s AI chip buy of $9 billion could light NVIDIA stock surge!
NVIDIA`s growth path has become a vital point of discussion. The major AI cheap maker’s stock performance is on the rise as its ability to exceed the market`s expectations and provide strong support. A lower growth rate might influence some of the investors to book their profits now.
Although the current launch of cutting-edge products could bring more opportunities for buying. AI stocks, including NVIDIA, have driven more than the anticipated growth of investors. However, the question remains : will NVIDIA continue its dominance, or could this be the inflection point for a reversal?
Laying a Bet on NVIDIA’s High-Stakes Potential
At its current market position, NVIDIA is now the most valued company, with a 195 % rise in share price and over $3.5 trillion in valuation. Most importantly, investors are still anticipating a continuation of this surge. Despite its not-so-impressive revenue statistics and reliance on primary customers, newly launched products like Blackwell could lead to further gains.
Both Risks and Growth Slowing Down
It is observed that NVIDIA’s revenue surged by around 265 % in Q2 2024 compared to 206 % in Q4 2023. As per the company’s projections, growth is expected to increase by 70 % for Q4 this year, after which it may begin to decline, as mentioned in Forbes’ November reports.
Currently, NVIDIA relies heavily on three key customers, each contributing 10 % to its total revenue. In 2024, accounts ranged between $10 billion and $11 billion in goods and services. These customers include Microsoft, Meta, and Super Micro. However, delays in Super Micro’s financial reports could pose risks for NVIDIA’s investors.
NVIDIA`s AI investment barriers
Establishing a foundation for generative AI requires a budget exceeding $1 trillion by 2030, with significant investments in areas such as data centers, chips, and essential resources like electricity and water. It is projected that the energy demands of AI centers could rise to 11–12% by 2030, compared to today’s 3–4%. Notably, NVIDIA’s growth rate may face challenges in the future without substantial revenue increases or a reduction in operational costs.
The return on investment for generative AI remains uncertain. While many users employ AI for tasks like overcoming writer’s block, relatively few companies utilize it to enhance their business strategies and operations. Without the development of advanced applications capable of driving substantial growth, NVIDIA could be adversely affected as companies may scale back their significant investments in AI.
NVIDIA will continue its growth
Despite NVIDIA’s slowing growth in 2024, its stock prices continue to rise steadily. This trend may lead investors to recalibrate their expectations, as the company has adeptly managed to adjust its growth projections while maintaining market confidence.
Positive developments could further boost NVIDIA’s stock performance. Large-scale orders for the latest AI chips from major AI service providers are creating opportunities for unexpected growth. Despite current challenges, these factors have contributed to the company’s sustained upward trajectory.
Blackwell rises and AI clusters
NVIDIA’s Blackwell chips are projected to generate approximately $13 billion in revenue by the fourth quarter of 2024. These chips are expected to outperform previous iterations, boasting 25% lower energy consumption and 30 times faster performance, as per recent reports. These advancements are fueling NVIDIA’s market surge.
AI providers are creating multi-billion-dollar AI clusters with NVIDIA’s new chips. Notably, Elon Musk’s X AI assembled a colossal setup with 100,000 Hopper chips in 2024 and plans to introduce 300,000 Blackwell chips by the upcoming summer. Musk’s $9 billion investment at $30,000 per chip could further propel NVIDIA’s stock prices to new heights.
In the third quarter of 2024, discussions led by NVIDIA’s CEO highlighted advancements in AI, focusing on process automation (up 59%), digital twins (up 35%), and conversational AI (up 28.6%), according to IoT analyses. These trends could benefit NVIDIA significantly, potentially driving its stock growth beyond expectations.
