The next wave of AI: Is Nvidia set for a strong rally?

Nvidia stock has surged 25% in the last month, an indicator that the AI rally is still on. With demand for its AI hardware still surging, the company is poised to lead the next wave of the AI boom with its highly anticipated Blackwell chips. Could the next wave of AI demand propel Nvidia's stock to unprecedented heights post-stock split?

Unprecedented demand for Blackwell chips

Nvidia’s upcoming Blackwell AI chips have generated enormous anticipation, particularly among major tech giants like OpenAI, Microsoft, Meta, and Alphabet. These companies, which are building the AI infrastructure of the future, are looking to Nvidia to power their advanced data centers, enabling them to deploy AI-driven products such as ChatGPT and Microsoft’s Copilot.

The Blackwell chips, priced between $30,000 and $40,000 per unit, promise significant improvements over the current generation, Hopper, with support for over 100 different system configurations. This increased flexibility makes Blackwell chips essential for companies seeking high-performance solutions tailored to their specific AI needs and an improvement on current chips that were already surpassing expectations.

Source: Techwire Asia

Demand for these new chips is described as “insane,” and Nvidia expects production to ramp up later this year, with billions in revenue anticipated over the coming quarters.

Nvidia’s AI hardware power

Nvidia’s dominance in AI hardware has been a key factor in its recent stock performance. Its GPUs are critical to nearly every AI application, from data centers to cloud computing, autonomous systems, and more. As more industries integrate AI into their operations, Nvidia’s hardware has become the go-to choice for companies looking to scale their AI capabilities.

This dominance is reflected in Nvidia’s impressive financial performance. The company reported revenue of $30.04 billion in its fiscal second quarter, a 122% year-over-year increase. Net income more than doubled to $16.6 billion, underscoring Nvidia’s strong market position. For the current quarter, Nvidia projects $32.5 billion in revenue, driven by continued demand for both its current Hopper chips and the upcoming Blackwell launch.

Nvidia’s position as a leader in AI has allowed it to surpass Microsoft as the second-most valuable company in the world, behind only Apple. With its stock up 150% year-to-date, Nvidia is poised for further gains as it capitalizes on the ongoing AI revolution.

The Blackwell chip represents more than just a product update; it’s a critical component of Nvidia’s strategy to maintain its leadership in the AI space. As production ramps up in the fourth quarter and into fiscal 2026, Nvidia is expected to see a substantial boost in revenue from the new chip. This aligns with the company’s plan to expand its presence in AI server markets, where it already holds an estimated 95% market share for AI training and inference chips.

Looking ahead, Nvidia’s ability to meet the surging demand for AI hardware and continue its innovation pipeline suggests strong long-term growth potential. The AI industry is still in its early stages, and as workloads become more complex and computing needs increase, Nvidia’s GPUs will remain central to solving these challenges.

Nvidia’s potential headwinds 

While Nvidia’s outlook is overwhelmingly positive, there are potential risks to consider. Geopolitical tensions, particularly involving Taiwan (a key player in the semiconductor industry), and possible export restrictions to China could create headwinds. Additionally, a slowdown in AI server spending could temper growth, though current trends suggest demand will remain robust.

Despite these risks, Nvidia’s strong market position, relentless innovation, and growing demand for its products position it well for continued success. Investors are keeping a close eye on how the company navigates these challenges while capitalizing on the opportunities presented by the AI boom.

Technical outlook: Road to $200?

At the time of writing, the stock is hovering around the $134 mark with strong upside momentum evident, as prices tower above the 100-day moving average. However RSI remaining flat just under 70 suggests a possible slowdown in upside momentum. This is supported by price almost touching the upper boundary of the Bollinger band - a signal for overbought conditions.

Source: Deriv MT5

Disclaimer:

The information contained within this article is for educational purposes only and is not intended as financial or investment advice. 

It is considered accurate and correct at the date of publication. Changes in circumstances after the time of publication may impact the accuracy of the information. 

The performance figures quoted refer to the past, and past performance is not a guarantee of future performance or a reliable guide to future performance.

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