Nvidia (NVDA.US) closed at a record high! Can Blackwell's optimistic expectations help it become the “world's best brother” again?

The Zhitong Finance App learned that Nvidia (NVDA.US) successfully calmed investors' concerns about product delays and long-term growth prospects, and the stock price began to rebound. Nvidia closed up 2.4% on Monday, closing at a record high, but below the all-time high of $140.747 hit in June. The stock has accumulated a cumulative increase of nearly 14% this month; it has accumulated a cumulative increase of nearly 179% so far this year, making it the second-best performing constituent stock in the S&P 500 index.

Nvidia surpassed Microsoft in second place in market capitalization last week, with a market capitalization of about 3.4 trillion US dollars by Monday, expanding its lead over Microsoft and maintaining its position as the second-highest US company after Apple.

Nvidia CEO Hwang In-hoon said that the company's Blackwell chips are “fully operational” and market demand is “very crazy.” Previously, due to engineering issues, the listing of Blackwell chips was delayed and triggered a sell-off of Nvidia shares by investors. However, this portion of the decline has now been erased.

A report released by Morgan Stanley analysts after meeting with Nvidia management last week said that orders for Blackwell's chips “have been pre-ordered for about 12 months” and “various signs suggest that business is still strong and future visibility is very high.”

The reviews reinforce the view that Nvidia is still a popular way to invest in AI, especially when big tech companies are still committed to their AI initiatives. For example, Microsoft (MSFT.US) is expected to increase capital expenditure by nearly one-third in fiscal year 2025, to reach $58 billion.

Zehrid Osmani, portfolio manager at Martin Currie Investment Management, said: “There have always been questions about the possible impact of delays in Blackwell's chip production, so this latest news is reassuring.”

In addition to optimism about Blackwell's chips, TSM.US's September results also showed strong demand for artificial intelligence, and OpenAI's valuation in the new round of financing reached 157 billion US dollars. The company also recently released an artificial intelligence model with reasoning capabilities. Gabelli Funds portfolio manager John Belton said these realities “have reignited interest in this field, and people are very excited about the use cases of artificial intelligence based on inference.” He added: “Reasoning represents a new field for Nvidia, and when you consider how computationally intensive it is, this could be a huge new product category.”

John Belton sees Nvidia as a core shareholder and believes artificial intelligence will provide “stable demand” for years to come. “This is not an undiscovered stock, but if it can achieve the expected numbers, the valuation is still reasonable,” he said.

According to data compiled by the media, Wall Street analysts expect Nvidia's revenue to more than double this fiscal year and increase by another 44% in the next fiscal year. Over the past quarter, analysts continued to raise their expectations for Nvidia's performance.

Nvidia's strong growth outlook dampened its valuation and helped bulls continue buying. The stock's price-earnings ratio is 37 times higher, a premium over the Nasdaq 100 Index, but it is below its five-year average and below the peak of more than 44 times it reached in June. “Nvidia still looks intimidating,” Zehrid Osmani said. “It is still well positioned to take advantage of artificial intelligence opportunities.”

The options market also showed signs of optimism. There was a wave of buying Nvidia's bullish options last Thursday. Also, the cost of the stock's call option compared to the put option has declined, making it less expensive to bet on its further rise. “Stock prices will continue to fluctuate and order numbers will fluctuate,” said Dan Flax, managing director of Neuberger Berman and senior research analyst. “But as long as Nvidia implements its product roadmap, it will drive healthy growth and keep its stock attractive.”