Shares of NVIDIA (NASDAQ: NVDA) rose as much as 6.2% on Tuesday. At 1:33 p.m. ET, the stock was still up 5.7%.
The trigger for the increase in the share price of the chip manufacturer and artificial intelligence (AI) specialist was reports that the delays in the Blackwell AI processor are unlikely to be as bad as originally feared.
Billions are at stake
Earlier this month, reports suggested that Nvidia’s highly anticipated Blackwell B200 AI processor, which is set to begin shipping later this year, would be delayed by up to three months due to a design flaw, according to a report that first appeared on The Information website.
With billions of dollars in potential revenue at stake with the next-generation AI processor, investors were rightly concerned and the stock price fell after the report was released.
However, it might not be quite so bad. Analysts from UBS have investigated the matter and claim that shipments of the Blackwell chips are “delayed by perhaps four to six weeks at most, which would bring them to the end of January 2025.” Demand remains strong and will likely be met by Nvidia’s H200 processor during the shorter delay, the analyst wrote in a note to clients. UBS further suggested that research labs and enterprise clients alike continue to invest heavily in AI, “both bullish indicators.”
A long way
It’s important for Nvidia investors to remember that the company’s growth – especially in AI – will come in spurts. Moreover, a look at Nvidia’s stock price reveals an important lesson. Although the stock has gained 24,000% over the past decade, there have been numerous 50% declines. or more.
Investors who have been able to endure the occasional, nerve-wracking volatility that comes with owning this high-growth stock have been richly rewarded. Moreover, one must ignore the day-to-day machinations of the stock market to reap these gains.
With a price-to-earnings ratio of 42, Nvidia may seem expensive, but I would argue that this is a reasonable price for a company that is delivering triple-digit growth and is in pole position in the AI revolution.
Should you invest $1,000 in Nvidia now?
Before you buy Nvidia stock, consider the following:
The Motley Fool Stock Advisor The analyst team has just published what they believe to be The 10 best stocks for investors to buy now… and Nvidia wasn’t among them. The 10 stocks that made the cut could deliver huge returns in the years to come.
Consider when NVIDIA created this list on April 15, 2005… if you had invested $1,000 at the time of our recommendation, You would have $668,029!*
Stock Advisor offers investors an easy-to-understand plan for success, including instructions on how to build a portfolio, regular updates from analysts, and two new stock recommendations per month. The Stock Advisor Service has more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns as of August 12, 2024
Danny Vena holds a position in Nvidia. The Motley Fool holds a position in and recommends Nvidia. The Motley Fool has a disclosure policy.
Why Nvidia Stock Soared on Tuesday was originally published by The Motley Fool
