Nvidia stock has risen 25% since September, nearing all-time highs. OpenAI’s $6.6 billion funding last week came ahead of the stock’s rise. Two other important factors point to continued demand for AI computing.
Thank you for registering!
Access your favorite topics in a personalized feed on the go. Download the app
By clicking “Sign Up”, you agree to our Terms of Service and Privacy Policy. You can opt-out at any time by visiting our settings page or by clicking “unsubscribe” at the bottom of the email.
Investors seem to have eased some of their fears about generative AI, at least for now, and the steady flow of news makes for a great month for Nvidia.
By market close on Wednesday, Nvidia’s stock price had risen nearly 25% since September, putting it once again on the verge of becoming the world’s most valuable company. The gains are in contrast to late summer, when the company’s strong results in August failed to sway investors. So what happened?
Since the beginning of October, investors and Nvidia watchers have gotten some new numbers to add to their models.
$6.6 billion for OpenAI
Despite OpenAI’s high executive turnover, the company recently completed a long-awaited $6.6 billion funding round, valuing the company at $157 billion.
This funding is the clearest sign that investors are still willing to back the biggest bet on generative AI available. Most of OpenAI’s funding flows to Nvidia through the companies that operate the vast data center capacity that OpenAI uses and will continue to use from Microsoft and others.
OpenAI last week announced new funding led by Thrive Capital with participation from Microsoft, Nvidia, Softbank, Khosla Ventures and others. Billionaire Vinod Khosla told Business Insider that the AI space is overhyped, but OpenAI is not. Nvidia stock rose for six days and was flat on Wednesday.
Related articles
Two deliveries to Blackwell
News that Nvidia’s next-generation Blackwell chips would not make it to market as planned due to manufacturing challenges shook the market in August, casting doubt on the company’s ability to maintain its promised pace.
Nvidia CEO Jensen Huang assured listeners on an Aug. 28 earnings call that billions of dollars of Blackwell’s revenue would ship in the fourth quarter, but the market didn’t react.
Hwang told CNBC last week that demand for Blackwell has been “insane.” And on Tuesday, two major customers announced they had received Blackwell systems in social media posts, which Nvidia also quickly shared. The Microsoft Azure team has posted on multiple platforms that the company has its first cloud running Blackwell.
Additionally, the OpenAI team posted, “Look what showed up on our doorstep! Thank you to Nvidia for delivering one of the first engineering builds of the DGX B200 to our office.” did.
$23.5 billion TSMC blowout
The generative AI supply chain has a number of component suppliers under Nvidia, but the most important and coincidentally the easiest to focus on is Taiwan Semiconductor Manufacturing Company.
TSMC reports its earnings monthly rather than quarterly, so as Nvidia’s largest supplier, it more frequently confirms that demand for its graphics processing units remains strong. The company won’t officially report third-quarter earnings until next week, but monthly results show third-quarter sales of $23.5 billion, beating analysts’ expectations.
TSMC’s revenue growth supports the view that AI computing demand is still in its infancy.
1 Underlying fear
Huang takes every opportunity to tout the money-making capabilities of GPU-enabled technology. He told David Solomon last month that companies that rent GPU capacity earn $5 in profit for every $1 spent.
But the market has shown that Mr. Hwang is not the source of information that investors need to hear from. But new research from Morgan Stanley suggests that anecdotal evidence that companies are seeing value in generative AI may be beginning to trickle down to the investor base.
The bank surveyed 400 companies across six industries in five countries and found that 90% of those implementing generative AI said the technology met or exceeded their expectations. did.
The bank also predicted that spending on cloud capacity expansion in 2025 would be nearly $275 billion, equivalent to the entire Apollo space program.
Nvidia’s early October rally may be due to investors being reawakened to the fact that Nvidia, despite relying heavily on generative AI growth, is much closer to its supply chain foundations. .
More data centers means more GPUs, and Nvidia’s opportunity only grows with more optimism about what companies can do with them. Morgan Stanley analysts wrote that concerns about Nvidia are “overdone.”
Have a tip or insight to share? Contact senior reporter Emma Cosgrove at ecosgrove@businessinsider.com or use the secure messaging app Signal: 443-333-9088
