Nvidia Corporation (NVIDIA CORP) is up 3% and continues to benefit from expectations for the next generation of artificial intelligence (AI) chips. Executives from Tesla and HP Enterprise also contributed to today’s gains, citing Nvidia as the dominant supplier in the AI craze.
Nvidia shares rose to $1,200, after ending the previous trading day (Tuesday) with a 1.3% increase. The company is expected to complete its stock split of 1-for-10 this Friday, which is also expected to push the stock higher.
CEO Jensen Huang recently announced plans for the Blackwell Ultra chip in 2025 and the next-generation Rubin platform in 2026, setting new highs for the chipmaker. There are still many signs of strong demand for Nvidia’s chips. Tesla CEO Elon Musk recently provided more details about Tesla’s planned purchase of Nvidia chips. According to reports, Musk requested that Nvidia deliver new chips to his social network X and his AI startup xAI before Tesla.
In a post on X, Musk noted that Tesla did not have any factories needing the chips at the time of the shipments. He expects Tesla to purchase additional Nvidia chips worth between $3 and $4 billion this year, with chip costs representing about two-thirds of the cost of building AI training infrastructure for electric vehicles.
Wall Street Fears Growing Competition
Good news for the AI sector and Nvidia also came from HP Enterprise, which noted strong demand for AI servers powered by Nvidia’s current-generation H100 chips in its latest reports. Additionally, when HP CEO Antonio Neri was asked if he expected Nvidia’s competitors to take significant market share in the future, he sounded skeptical.
“Today, in the field of generative artificial intelligence, Nvidia is the market leader. We built our strategy and offerings based on this,” Neri said. “There are new systems coming in 2025 that might have different types of chips, but right now we’re only working with Nvidia.”
Nevertheless, Nvidia’s competition appears to be growing. The latest competitor is Taiwanese company Kneron, an AI chip startup backed by Qualcomm, which launched its KNEO 330 product on Wednesday. The new product works differently from cloud-based AI models, which are often powered by Nvidia’s energy-intensive chips. The KNEO 330 is designed to consume less power when running AI models.
Recently, it was also reported that Japan’s Softbank is in talks to acquire British AI chip developer Graphcore. Graphcore primarily sold hardware to AI startups looking to train models at a lower cost. The company was previously valued at $2.8 billion, but a deal with Microsoft fell through, causing mounting losses. Acquiring the British chip developer may be the first step in a larger plan. Softbank’s founder is considering creating a $100 billion chip venture connected with the company’s chip designer Arm.
Goldman Sachs stated that they are not concerned by the increase in competition and believe Nvidia will remain the clear leader for the foreseeable future, citing the company’s integrated hardware and software capabilities, as well as its pace of innovation. The bank raised its target price to $1,100 from $1,000 and maintained its buy rating.
The Latest Reports
In its first-quarter results for 2024, Nvidia reported earnings per share of $6.12 on revenues of $26 billion, surpassing Wall Street’s expectations of $5.59 per share on $24.51 billion in revenue. The company also announced a 1-for-10 stock split and a 150% increase in the dividend.
For the second quarter, Nvidia expects revenues of $28 billion, with a deviation of 2% up or down, exceeding analysts’ expectations of $26.62 billion. Data center revenue totaled $22.6 billion, up 23% from the fourth quarter of 2023 and 427% from a year earlier. Free cash flow is $14.94 billion, up 466% year over year.
“The next industrial revolution has begun. Companies and countries are partnering with Nvidia to move traditional data centers worth a trillion dollars to accelerated computing and build a new type of data centers—AI factories,” said Jensen Huang, CEO of Nvidia. “AI will bring significant productivity gains to almost every industry, helping companies to be more efficient in costs and energy while increasing revenues.”
Following Nvidia, AMD (ADVANCED MICRO DEVICES) is up 3.8%, Intel (INTEL CORPORATION) is up 2.5%, and Micron (MICRON TECHNOLOGY) is up 3%.
Nvidia now trades at a value of $2.9 trillion, after the company’s stock rose 142% since the beginning of the year and 206% in the last 12 months.