Nvidia (NASDAQ:NVDA) stock has been on a remarkable run, gaining more than 3% in afternoon trading on Tuesday and positioning itself for its fifth consecutive day of increases. With growing demand for AI technology and bullish sentiment from Wall Street analysts, the company continues to lead the semiconductor industry. Nvidia stock growth has surged 189% year over year, making it one of the top-performing tech stocks of 2024.
Strong AI Demand Powers Nvidia’s Success
Wall Street analysts from firms like KeyBanc, Citi (NYSE:C), and Bernstein have all reiterated their Buy ratings on Nvidia stock, citing its dominant position in the AI market. KeyBanc, in particular, raised its fiscal year 2025 revenue forecast for Nvidia to $130.6 billion, up from its previous estimate of $128.5 billion. The increase is driven by Nvidia’s flagship Blackwell AI chips, which are expected to contribute $7 billion in revenue in the fourth quarter alone.
Demand for Nvidia’s earlier AI chips, such as the H100s and H200s, remains robust, underscoring the strength of the company’s product lineup. Nvidia’s ability to innovate and meet the needs of AI applications has been a key factor behind its stock growth this year.
AI Funding Fuels Nvidia’s Growth
The rise of AI technology has sparked massive investment, which has, in turn, fueled Nvidia’s growth. Wedbush analysts noted that a potential new wave of AI funding, like OpenAI’s $6.6 billion investment round, could drive even more demand for Nvidia’s AI chips. Matt Bryson of Wedbush stated, “There is little likelihood AI spending growth pauses through much (if not all of 2025),” indicating that Nvidia is well-positioned to continue its upward trajectory.
Investors are also eyeing Nvidia’s AI software capabilities. While the company is best known for its hardware, Nvidia is using its AI Summit in Washington, D.C., to showcase its growing software portfolio. This move is part of Nvidia’s broader strategy to expand beyond chips and into AI solutions, reinforcing its leadership in the fast-growing AI sector.
Foxconn Partnership Expands Production
Adding to the positive momentum for Nvidia is its partnership with electronics manufacturer Foxconn (2354.TW). Foxconn recently announced plans to build the world’s largest factory for assembling Nvidia’s AI servers in Mexico. This new megafactory will reduce Nvidia’s reliance on Chinese manufacturing amid rising trade tensions and allow the company to meet the skyrocketing demand for AI hardware.
Foxconn’s chair, Young Liu, highlighted the “crazy” demand for Nvidia’s latest AI chips, reinforcing the importance of this new facility. Nvidia and Foxconn are also collaborating on building Taiwan’s fastest supercomputer, further expanding Nvidia’s global footprint in AI technology.
Nvidia Leads the Semiconductor Sector
Nvidia isn’t the only semiconductor company seeing growth. According to data from the World Semiconductor Trade Statistics (WSTS), sector-wide sales rose by 28% in August compared to last year. JPMorgan (NYSE:JPM) analysts expressed optimism about the semiconductor industry, noting that stocks in this space should continue to rise due to improving supply-demand dynamics and stable earnings growth in the second half of 2024 and into 2025.
The PHLX Semiconductor Index (^SOX), which tracks the performance of the semiconductor sector, rose 1.17% on Tuesday, reflecting strong investor confidence in the industry. Nvidia’s success is playing a major role in driving broader semiconductor stock growth, and its leadership in AI chips positions the company to benefit from continued industry expansion.
Challenges for China’s Semiconductor Sector
While Nvidia and other U.S. semiconductor companies are thriving, chipmakers in China are facing headwinds. China’s Semiconductor Manufacturing International Corporation (SMIC) (0981.HK) saw its stock drop 18% on Tuesday after the Chinese government’s economic planning agency failed to announce new stimulus measures. Investors had been expecting these initiatives to boost China’s semiconductor industry, but the lack of government action led to a sharp selloff.
In contrast, Nvidia’s global strategy, which includes expanding production outside of China, is paying off. The company’s ability to navigate geopolitical challenges and meet global demand for AI technology further strengthens its position in the semiconductor market.
Conclusion: AI Leadership Fuels Nvidia Stock Growth
Nvidia stock growth is driven by its leadership in AI chips, robust demand from the AI sector, and strategic partnerships like the one with Foxconn. Wall Street analysts remain bullish on Nvidia’s future, with several raising their revenue forecasts as the company continues to dominate the AI hardware and software space.
As AI investment continues to grow, Nvidia is well-positioned to maintain its leadership and push its stock even higher. For investors, Nvidia remains one of the top semiconductor stocks to watch in 2024.
Featured Image – Megapixl
