Nvidia shares surge after stellar Q3 report

Nvidia shares surged in early Thursday trading, approaching their all-time high following stellar third-quarter earnings from the chipmaker.

At #LenovoTechWorld, our CEO Jensen Huang joined Lenovo CEO Yuanqing Yang to introduce Lenovo Hybrid AI Advantage with NVIDIA and unveil new solutions featuring @Lenovo's latest Neptune liquid-cooling technology for #NVIDIABlackwell. https://t.co/uhCReSHBBD

— NVIDIA (@nvidia) October 16, 2024

Nvidia, which is now the world’s second-most valuable company just behind Apple, has been benefiting from surging demand driven by massive investments in AI technology over the past 18 months. This demand has strained the broader semiconductor supply chain and Taiwan Semiconductor Manufacturing Company (TSMC), Nvidia’s key supplier. TSMC, the world’s largest contract chipmaker, reported record third-quarter earnings on Thursday.

📣 At NVIDIA AI Summit, US Secretary of Energy Jennifer Granholm detailed #AI's transformative role to address challenges in clean #energy innovation, scientific discovery, and national security.

Read the recap post to learn more: https://t.co/MbubI6txtl

— NVIDIA AI (@NVIDIAAI) October 16, 2024

Group CEO C.C. Wei highlighted that the AI-driven demand is “real and just the beginning,” while noting that overall market activity outside of AI investments is stabilizing and starting to improve. TSMC posted a record quarterly profit equivalent to US$10.06 billion, forecasting full-year growth of around 30% and capital spending of over $30 billion for the year, with more expected in 2025.

Heard on the Street: It remains to be seen if Big Tech’s AI investments will be a gold mine or money pit
Capital spending by Microsoft, Google, Amazon and Meta is expected to keep surging, while Apple’s AI debut gets cloudedhttps://t.co/rl03bEFSOB via @WSJ

— Paul Triolo (@pstAsiatech) October 16, 2024

Wedbush analyst Dan Ives described TSMC’s earnings as critical for the AI revolution thesis and future growth, emphasizing that “TSMC is what matters for the tech and AI trade.” Market research from IDC predicts that generative AI spending could exceed $150 billion by 2027, representing a compounded annual growth rate of approximately 86% from 2023 levels.

Nvidia shares approach all-time high

Total AI spending, including software, hardware, and services, is projected to more than double from $235 billion last year to around $632 billion by 2028. Advanced Micro Devices (AMD) recently told investors that the market for AI accelerators—chips essential for large-language models used by hyperscalers such as Microsoft, Alphabet, and Meta Platforms—could reach $500 billion within three years, marking a 25% increase from its previous forecast. Goldman Sachs recently updated its price target for Nvidia, underscoring the company’s pivotal role in the AI chip market. Nvidia projected current-quarter revenue near $32.5 billion, more than double from the same period last year, despite experiencing some delays in shipping its new Blackwell processors due to design changes and supply-chain issues. Nvidia’s Chief Financial Officer Colette Kress noted that Blackwell processors are expected to generate “several billion” in revenue for the fiscal fourth quarter, ending in January, with legacy Hopper sales accelerating in the latter half of the year. Nvidia shares were up 3.05% in premarket trading, indicating an opening bell price of $139.86, close to their all-time peak of $140.76. TSMC shares also rose significantly, gaining 8.8% to $204.00 each, extending their 2024 advance past 90%.