Nvidia's Rollercoaster Ride: Stock Dips Amidst AI Chip Expansion and Record Revenues

Nvidia (NVDA) experienced a recent uptick of 1.92%, though its stock has dipped 9.79% over the past week and decreased 16.08% year-to-date. The company's latest market capitalization stands at $2.7 trillion. Some analysts, like those at Bernstein, consider Nvidia's valuation appealing, maintaining an "outperform" rating and a target price of $185 amid its volatile market performance.

OpenAI and Oracle are gearing up to deploy tens of thousands of high-performance AI chips from Nvidia at a new data center in Texas. This initiative marks the first step in their $100 billion "Stargate" infrastructure project. The facility, located in Abilene, will feature 64,000 Nvidia GB200 chips by the end of 2026, with the initial batch of 16,000 chips expected by summer.

This substantial deployment underlines the potential scale of the Stargate venture, a collaboration initiated by OpenAI, SoftBank, and Oracle. OpenAI's representative emphasized the joint design and delivery efforts for the Abilene data center, while Oracle oversees the operational aspects of the supercomputer housed there. Nvidia refrained from commenting on these developments.

The launch underscores the race among tech giants to utilize Nvidia's latest chips, key in training and deploying generative AI models. Their deployment plan extends beyond Texas, with potential sites in Pennsylvania, Wisconsin, Oregon, and Salt Lake City being evaluated for future expansions.

Despite recent fluctuations, Nvidia appears to have addressed some supply chain concerns, with shipments of its Blackwell products totaling $110 billion in revenue for Q4. The company projects a continuous surpassing of supply against growing demand in upcoming quarters, although concerns about growth potential, supply chain issues, tariffs, and regulatory risks persist.

Nvidia’s GTC 2025, an AI-focused conference for developers, is scheduled to occur from March 17-21 in San Jose, California.

In their recent FY25Q4 earnings report, Nvidia showcased a notable increase in revenues, amounting to $393 billion, a 78% year-over-year rise, surpassing Bloomberg’s consensus. They projected further growth driven by the successful performance of their Blackwell series and anticipated the GB300's release later this year. This product cycle could enhance their competitive edge and financial performance.

As AI demands solidify, the company remains well-positioned in the sector, with recent improvements in supply chain hurdles favourably impacting their outlook. While risks remain, their strategic advancements suggest a promising trajectory for sustained growth.