NVIDIA's (NVDA, Financial) stock price has surged as U.S. markets anticipate the new earnings season. Companies are making significant investments in NVIDIA's AI chip technology and products, raising market interest in whether this upward trend can be sustained. Recently, NVIDIA's stock climbed 2.4%, surpassing its previous record set in June, with its market capitalization reaching $3.4 trillion, closely approaching Apple's. This year alone, NVIDIA's stock has increased by nearly 180%.
This optimism extended to the Asia-Pacific markets, where chip stocks rose significantly. As part of NVIDIA's supply chain, Taiwan Semiconductor Manufacturing Company (TSMC) and Hon Hai Precision Industry (Foxconn) saw stock gains of over 2%; Tokyo Electron Limited's stock rose 5%, while Renesas Electronics Corp. experienced a more than 4% increase. SoftBank Group, a major shareholder in Arm Holdings, saw its shares rise by over 6.4% at one point. Although the Asia-Pacific markets retreated after afternoon trading, Ruixin Micro and Jingjia Micro in China's A-share market still posted gains of over 6% at the time of reporting.
NVIDIA's stock surge comes as significant tech companies like Microsoft, Meta, Google, and Amazon make major investments in NVIDIA's flagship GPU chips to build data centers for advanced AI research. These tech giants are expected to release their quarterly earnings reports by the end of the month, with the market eagerly awaiting announcements on AI infrastructure spending.
According to a report by Mizuho Securities, top tech companies spend billions annually on AI development, a large portion of which goes to NVIDIA. The report highlighted that NVIDIA controls about 95% of the AI training and inference chip market. Over the past five quarters, NVIDIA's revenue has more than doubled each quarter, with three quarters experiencing over a twofold increase. NVIDIA's founder and CEO, Jensen Huang, recently revealed that demand for their next-generation AI flagship chip, Blackwell, is "crazy," with expected revenues reaching billions in the fourth quarter.
NVIDIA's supply chain partners, including Foxconn and Advanced Micro Devices (AMD), have disclosed plans to accelerate the construction of supercomputers and servers centered around NVIDIA's Blackwell platform, aiming to boost corporate profit margins. The Blackwell chip is expected to be priced between $30,000 and $40,000, with production increasing in the fourth quarter and continuing into fiscal year 2026.
However, market analysts are closely watching whether NVIDIA's growth momentum can persist. According to data from the London Stock Exchange, NVIDIA's growth is expected to slow slightly for the remainder of the year. Analysts project that NVIDIA's revenue for the quarter ending October will grow approximately 82% to $32.9 billion.
Mizuho Securities' report also highlighted risks such as potential escalations in U.S. export restrictions and significant cutbacks in AI data center server spending. Recently, reports emerged that the U.S. may consider restricting the sale of advanced AI chips by NVIDIA and other U.S. companies to certain countries, with a current focus on Middle Eastern nations. Measures might include setting export license caps for specific countries.
NVIDIA has not commented on these reports, but the discussion aligns with a new regulation announced last month by the U.S. Department of Commerce. The regulation aims to streamline the process for companies like NVIDIA to ship AI chips to data centers in the Middle East by allowing these centers to apply for "verified end-user status," avoiding the need for separate licenses from U.S. suppliers.
