Nvidia (NVDA.US) stock price rebounded 11%, and the popularity of Blackwell chips helped it reach a record high

The Zhitong Finance App learned that Nvidia (NVDA.US)'s stock price rebounded significantly this month, rising 11%, close to the record high in June closing, making it the second-best performing stock in the S&P 500 index. This increase was mainly due to the company's success in calming investors' concerns about product delays and long-term growth prospects. CEO Wong In-hoon announced that Blackwell chips are in full production and market demand is strong. The Morgan Stanley report also supports this optimism, pointing out that business and prospects are still strong 12 months after orders have been scheduled.

As a result, Nvidia's position as the preferred stock to invest in artificial intelligence has been further consolidated, especially in the context of large companies such as Microsoft (MSFT.US) increasing investment in artificial intelligence. According to information, Microsoft is expected to increase capital expenditure by nearly one-third in fiscal year 2025, to about $58 billion.

Zehrid Osmani of Martin Currie Investment Management said concerns about production delays have abated. Furthermore, TSM.US's sales situation and OpenAI's overvalued financing also reflect the strong demand for artificial intelligence in the market.

John Belton, portfolio manager at Gabelli Funds, believes that the use case of artificial intelligence based on inference has revived market interest, which could bring Nvidia a huge new product category. Belton sees Nvidia as a core shareholder and believes artificial intelligence will bring “stable demand” over the years. “It's not an undiscovered stock, but if it achieves the expected numbers, the valuation is still reasonable.”

According to the data, analysts expect Nvidia's revenue to more than double this fiscal year and increase by another 44% in the next fiscal year, and Wall Street continues to raise Nvidia's earnings and profit expectations. As can be seen from this, Nvidia's growth prospects are very strong, which supports its stable valuation and strengthens investors' confidence to continue buying. Although the company's price-earnings ratio is approximately 37 times higher than the Nasdaq 100 index, it is low compared to the five-year average and compared to the peak of more than 44 times in June.

Osmani, portfolio manager at Martin Currie Investment Management, said: “Nvidia is still very strong. It is in a very good position to seize opportunities in the field of artificial intelligence.”

There are also positive signs in the options market. In Thursday's trading, there was a wave of buying spurts. More than 30 million shares were bought at a price of $150 to $189 per share. These options expire in March. Meanwhile, Nvidia's stock closed at $134.80 in Friday's trading.

Furthermore, the cost of call options compared to put options (the so-called inclination) has been reduced, making it cheaper for investors to bet on further increases in stock prices. These options contracts will expire after Nvidia is expected to release its fourth quarter earnings report at the end of February.

Dan Flax, managing director and senior research analyst at Neuberger Berman, said: “Nvidia's stock price may continue to fluctuate, and the order situation may also be unstable. But if the company successfully implements its product roadmap, it will drive healthy growth and keep the stock attractive.”