Nvidia is back on the move after the world’s three largest cloud companies and Metaplatforms last week induced increased spending to keep up with the artificial intelligence arms race. Some, if not a lot, of that spending should continue to fill the coffers of the AI chip tycoon run by Jensen Huang. Club stock Nvidia soared another 4% on Monday, hitting a new all-time high with a market capitalization of about $5.12 trillion. More analysts are expected to raise their quarterly estimates and price targets for Nvidia ahead of next week’s earnings report. Last Wednesday’s closing price exceeded $5 trillion for the first time. After three business days, its market cap had increased by nearly $100 billion. In a note to clients on Monday, Loop Capital raised its price target on Nvidia from $250 to $350 per share. Analysts acknowledged that the 70% upside built into PT for the next four to five quarters from Friday’s close seems insane. However, they believe that the “research results suggest that NVDA is on track to begin a GPU ramp-up that will effectively double shipments over the next 12-15 months, benefiting from (average selling price) expansion and networking.” Loop’s memo was announced before the opening bell on Monday and ahead of two major developments for NVIDIA. First, Microsoft said it had secured an export license to ship Nvidia chips to the United Arab Emirates. Second, Amazon has secured a $38 billion commitment from OpenAI to use its largest cloud, AWS, for more computing, leveraging hundreds of thousands of Nvidia graphics processing units (GPUs). In second place is Microsoft’s Azure, and in third place is Google Cloud. On Friday, we learned that the South Korean government, along with major South Korean industrial companies such as Samsung and Hyundai, is working with Nvidia to “expand the country’s AI infrastructure by equipping over 250,000 Nvidia GPUs across sovereign clouds and AI factories.” The idea is for various South Korean companies (some government-funded, others private) to procure Nvidia chips and build various data centers equipped with the infrastructure, forming a “foundation for AI-powered economic growth and innovation across South Korean industries, including automotive, manufacturing, and telecommunications.” Please remember. Nvidia signed its own OpenAI deal in September, announcing it would invest $100 billion in OpenAI to help the company build 10 gigawatts of artificial intelligence data center capacity. NVDA 5Y Mountain 5 Years of Nvidia Performance All of these updates come as it becomes increasingly clear that access to AI infrastructure is not only critical for companies looking to compete with each other, but is also rapidly becoming a national security issue. To compete in a world where data is gold and cyberattacks can cause billions of dollars worth of economic damage, governments must proactively secure the supply of cutting-edge, high-speed computing platforms. At this point, Nvidia’s latest products are much more than just chips. There is no denying that the benefits associated with AI trade are already incredibly large, but there is still a lot of room for action. However, that does not mean that these benefits are earned in a linear manner. While AI is real and the demand is certainly there, it must be taken into account that many of the companies being bid on are still not making a profit, and in some cases may not even have sales yet. I do not recommend playing in that part of the speculative field. While we have to consider that bubble-like bubbles in one part of the market could seep into other parts, or that nuclear or quantum microbubbles bursting could cause collateral damage in less speculative names, the latest update supports the idea that investors need to maintain exposure to top-quality AI players, and that for all the billionaires who have already minted it, NVIDIA’s best days are still ahead. (Jim Cramer’s charitable trusts are long NVDA, MSFT, AMZN, META. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
