The background of the fall in Nvidia stock prices leading the AI revolution and the direction of growth

Against the backdrop of rapid growth in the AI market, Nvidia's corporate value exceeded 3.6 trillion dollars in 2024, and established a position in the technology field. The latest financial results report recorded a 94% increase in sales compared to the same period last year, and growth led by the data center division stands out. However, stock prices have fallen by nearly 10% since financial results were announced, and fluctuations in investor sentiment are visible.
Meanwhile, demand for next-generation AI technology, starting with Blackwell chips, is increasing, and it seems that the company still has plenty of room for growth. While market reactions and expert opinions intersect, it is difficult to predict the future of Nvidia, expectations are placed on the company's potential, which is at the center of the AI revolution.

The rapid expansion of the data center division can be cited as one of the factors supporting Nvidia's growth. Sales in the same division reached 30.8 billion dollars, up 112% from the same period last year, and demand from the AI revolution directly contributed to business results. The company is at the center of the AI infrastructure market and is in a position to provide computing technology that is the foundation for next-generation AI models.
In particular, GPU products that support the evolution of generative AI and deep learning have become an essential presence among cloud providers and companies. Nvidia's strategy is characterized by positioning the role of a data center as a core ecosystem in the AI era rather than just a server infrastructure.

This is also clear from the fact that they aim to support a wide range of applications through joint development of AI solutions, as shown in the partnership with Hewlett Packard Enterprise. Meanwhile, competitors are also aiming to expand their market share in this field, and Nvidia needs to show an attitude of not sparing research and development expenses.
In the future, as the growth of the AI market accelerates, how far Nvidia can drive the evolution of data center technology will be a factor that will determine the company's sustainable growth.

The introduction of the next-generation AI chip “Blackwell Architecture” is an important step for Nvidia to make a further leap forward in the AI market. This product is scheduled to be released in the fourth quarter of 2024, and it has garnered such demand that CEO Jensen Hwang described it as “insane.” Production of this product is progressing at a pace that exceeds initial forecasts, and revenue of several billion dollars is expected during the same quarter.
The strength of Blackwell chips is that they have high-performance AI processing capabilities that surpass existing GPU technology. In particular, applications in various fields such as generative AI, autonomous driving technology, and biotechnology are expected, and Nvidia plans to maintain a competitive advantage in these technical areas. As a result, the company's AI ecosystem will expand further, and it is expected that it will form a foundation to capture demand from the entire industry.

However, the success or failure of new products is greatly influenced by market trends and competitors' movements. In order for Blackwell chips to have an impact as expected, not only product technical capabilities, but also strategic partnerships and speed of market development are important factors.

Nvidia's stock price fell about 10% after financial results were announced, highlighting changes in investor sentiment. This can be said to be a typical market reaction of “selling on the news,” but at the same time, it can also be taken as a natural adjustment due to the fact that stock prices have risen drastically in a short period of time. Considering the background of recording a 742% increase in the past 2 years, discussions over current stock price levels can also be said to be movements peculiar to the stock market.
Meanwhile, analysts have not lost their bullish stance on Nvidia's medium- to long-term growth, with JPMorgan and Goldman Sachs raising target stock prices. On Wall Street, the prevailing view is that Nvidia will continue to grow as a leader in AI technology.

Short-term stock price fluctuations do not reflect long-term value. Investors believe that companies such as Nvidia, which are at the center of the AI revolution, should be evaluated from the viewpoint of future profitability and market share rather than immediate price fluctuations. There is also a possibility that strategic movements to search for new investment opportunities lurk behind stock price adjustments.

November 26, 2024