Nvidia stock surges 6%

Nvidia stock (NVDA) surged over 6% on Thursday, joining a broader rally in tech stocks that led a strong market rebound. This increase followed a significant drop the previous day, when Nvidia and other semiconductor stocks fell by more than 5%.

Despite the recent bounce, Nvidia has lost over $750 billion in market capitalization since its peak in June, with the stock declining approximately 25%. This decline has been driven by concerns that the AI sector may be cooling off and growing unease about the state of the US economy.Analysts have shrugged off a recent report of a possible delay in Nvidia's next-generation chip called Blackwell.

"We still sense an urgent demand across the board, and that mitigates the risk in a pause in shipments as customers wait for the next generation of chips to be available in volumes," New Street Research technology infrastructure analyst Antoine Chkaiban told Yahoo Finance on Thursday.

Nvidia, set to report its second-quarter earnings later this month, has experienced remarkable growth in its data center segment. The company reported first-quarter data center revenue of $22.6 billion, marking a 23% increase from the previous quarter and an impressive 427% surge year-over-year.

Chief Financial Officer Colette Kress attributed this outstanding performance to sustained strong demand for the Hopper GPU computing platform.

Analysts stay bullish about Nvidia stock

Analysts indicated that while the delay could cause short-term volatility for Nvidia, they remain optimistic about the chipmaker’s long-term outlook, emphasizing its strength in AI.

Oppenheimer analysts noted that Nvidia’s competitive position remains robust, and they do not anticipate any significant market share loss from the delay. They view Nvidia as "best positioned in AI, benefiting from comprehensive AI hardware and software solutions."

Goldman Sachs analysts also acknowledged that the delay might introduce some near-term volatility for Nvidia. However, they expect minimal impact on earnings for 2025 and believe the company's long-term competitive position will remain strong.

AI chip launch delayed

Nvidia’s forthcoming artificial intelligence chips will be delayed by at least three months due to design issues, potentially impacting major clients like Meta Platforms, Google, and Microsoft, who have collectively placed orders worth tens of billions of dollars for these chips. This week, Nvidia informed Microsoft, one of its largest customers, and another major cloud provider about the delay affecting the most advanced AI chip in its new Blackwell series, according to a Microsoft employee and another source familiar with the situation.

The robust demand for the upcoming Blackwell series has significantly contributed to the rise in Nvidia's stock this year. This anticipated surge was also expected to positively impact Nvidia's partners, such as Micron Technology (MU) and Monolithic Power Systems (MPWR), and benefit other players in the AI sector.

Demand rising for AI chips

Last week, Meta Platforms (META) provided positive news for Nvidia, as its AI spending plans gave a further boost to the leader in AI chips. Meta, a major customer of Nvidia's AI chips, is reported by CNBC to aim for the installation of 350,000 Nvidia H100 graphics cards by the end of the year.
In June, Nvidia announced plans to launch its most advanced AI platform by 2026, incorporating next-generation memory to enhance processing speeds.

Additionally, Foxconn revealed plans to construct an advanced computing center in Taiwan using Nvidia's Blackwell chips. Nvidia is collaborating with Foxconn to build data centers that will support advancements in autonomous driving and the electric vehicle market. Although Tesla currently uses Nvidia's chips, it plans to develop its own custom chips in the future.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.