Nvidia Tops WSB Rankings Amid AI Investment Surge and Supply Chain Challenges

Nvidia (NVDA) retains its top spot in the latest WSB rankings, maintaining its position from the previous day. The stock surged 8.15% today, marking its third consecutive day of gains, with a cumulative rise of 13.69% over the past three days.

The graphics chip giant is accelerating its investments in AI startups. Since the rise of generative AI in 2023, Nvidia has participated in 74 funding rounds with a total investment exceeding $10.9 billion. These investments aim to encourage these companies to adopt Nvidia’s GPUs, reinforcing its leadership in the AI chip market. Notably, Nvidia has invested in 18 of the world’s 42 generative AI unicorns.

CEO Jensen Huang emphasized that countries are actively developing large language models based on their own data, culture, and language. Additionally, Nvidia is in talks to invest in OpenAI, the spearhead of the generative AI surge, with Apple rumored to join the investment discussions. OpenAI's valuation is expected to reach $100 billion.

Despite the buzz around generative AI, the overall startup investment market has cooled. In 2023, total venture capital investment in the US dropped 30% year-over-year to $170.6 billion, marking a second consecutive year of decline. In this context, tech companies like Nvidia have become crucial sources of venture funding, matching the activity levels of large venture capital firms and surpassing Japan's annual venture investment.

Nvidia's strategy is not merely about immediate gains but focuses on long-term growth. By funding startups, Nvidia promotes the adoption of its GPUs and AI development tools, further solidifying its market dominance where it already holds about 80% of the global AI semiconductor market. This strategy reflects Nvidia's emphasis on long-term returns rather than short-term profits.

During the recent tech summit, Jensen Huang highlighted the strong demand for Nvidia’s products and the exceptional ROI of its chips. This positive outlook led to an 8% rise in Nvidia's stock price. Huang pointed out that Nvidia's GPUs address the limitations of Moore's Law, providing revolutionary advancements in data processing speed and cost efficiency.

Supply chain challenges persist, with Huang comparing the complexity of producing Nvidia chips to making an electric car. While this scarcity creates high premiums, it also poses a risk if supply cannot meet demand. Nonetheless, Huang praised TSMC for its crucial role in the supply chain, emphasizing its remarkable responsiveness, which strengthens Nvidia’s strategic advantage.

Looking ahead, Huang is optimistic about AI’s expanding role in fields like software development. He questioned why computers shouldn't write software themselves, a vision that could drastically enhance productivity across the tech industry.

Overall, Huang's remarks not only underscore Nvidia's leadership in AI chips but also paint an exciting future for the tech industry. However, the tension between high demand and limited supply demands vigilance. Without a doubt, Nvidia stands at the forefront of the AI-driven era.

Despite recent gains, Nvidia’s stock faced pressure when its fiscal Q2 2025 earnings, though excellent, failed to meet the most optimistic forecasts. The delay in delivering its highly anticipated Blackwell chip also contributed to an 8% drop post-earnings report. Nvidia's dependency on a few large clients like Microsoft and Meta also introduces some business risks.