Is Nvidia (NVDA) Back In Focus As Demand For Its AI Chips Insane

Nvidia CEO Jensen Huang said demand for the company’s AI chips is “insane” in an interview with CNBC Wednesday.

Chipmaker Nvidia is expanding its partnership with IT consulting firm Accenture to help companies use artificial intelligence, the companies announced Wednesday.

Though Nvidia shares have more than doubled in value since the start of the year as companies race to build out their AI infrastructure.

But can these helped to bring Nvidia back to near its previous highs? Nvidia shares closed 1.58% higher on 02 Oct (Wednesday) and it has more than doubled in value since the start of the year as companies have raced to buy the company's tech and build out AI infrastructure. Accenture shares moved 1.2% higher Wednesday and have gained about 1.5% in 2024 so far.

As part of the deal, Accenture will form a new business group with consultants trained to help clients build custom AI solutions and capabilities with Nvidia’s tech, as well as Meta’s (META) Llama collection of open-source AI models.

The partnership would allow Nvidia to capture a larger part of the global AI demand, hope that this beginning of a new wave called enterprise AI.”2 would helped to cement Nvidia’s position in the marketplace.

We should be seeing the demand for Nvidia H100 GPU growing as their customer prepare their data centre for the new Blackwell chips, which is expected in this quarter (Q4 2024).

So can Nvidia ride on the increase in shipments for H100 to propel its stock price? Can we expect another surprise towards the end of the year (2024)?

The semiconductor industry and chipmakers' stocks tend to be highly cyclical.1 Still, many investors view the sector as important, given its secular growth trend and significant role in developing new technology.

According to an analysis by Gartner in January 2024. Almost no chip manufacturer improved its results year-on-year - with one clear exception.

NVIDIA, previously best known to video gamers for its graphics cards, made it into the top 5 companies with the highest annual revenue in the semiconductor segment for the first time this year with a sales increase of almost 56 percent. This can be attributed to the AI boom of the past year, driven by the success of OpenAI's ChatGPT and the resulting increase in demand for chips geared towards AI applications. In 2022, NVIDIA was still in twelfth place in annual revenue.

In contrast, the financial results of Samsung Electronics and Intel, which have alternated in first and second place among the chip manufacturers with the highest sales numbers for years, significantly worsened. Samsung, for example, lost around 38 percent of its revenue compared to the previous year, compared to 17 percent for Intel. Alongside NVIDIA, only Broadcom and STMicroelectronics in the top 10 semiconductor vendors improved on the sales front compared to their previous year, albeit only in the single-digit range.

If we looked at Nvidia on the short term using KDJ, there have been sign of MACD making a crossover, a potential bearish MACD crossover look like forming.

The KDJ is also making a downward trend with sell off from investors because of concerns over the geopolitical tensions in the middle east, and that might affect big tech companies spending on the AI chips.

But we will need to look at how the development of the tensions go, there could be some surprise from the semiconductor sector.

If we looked at Nvidia for a mid term, there might be an opportunity of higher stock price as we can see that Nvidia is trading above the short-term and long-term MA, and we could see that uptrend signal is showing for mid-term.

I will be monitoring this stock as I have a position and waiting for its new high.

As Nvidia is navigating the challenging environment, we might expect a surprise if there is any positive development, if we looked at it positively, companies might take this opportunities to invest into AI chips to speed up their AI deployment.

But we will have to see how the geopolitical tensions develop.

Appreciate if you could share your thoughts in the comment section whether you think Nvidia could come back with a better performance.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.