Why is Wall Street bullish on NVIDIA? The market is still closely watching the financial reports of technology companies!

On Monday, NVIDIA surpassed last week's intraday high of $140.89, closing up 4.14% to a new closing high of $143.71, with a market capitalization of $3.53 trillion, approaching Apple's $3.6 trillion market cap.

Despite NVIDIA's stock price falling after ASML's disappointing earnings report last Tuesday, and concerns in the market about a slowdown in AI spending, TSMC later released a strong outlook, coupled with analysts' optimistic views on Blackwell demand. NVIDIA's stock price hit a record high last week and ended the week with a 2% gain. On Monday, the stock price continued to rise, closing with a cumulative increase of over 50% from its market bottom in early August.

Wall Street Remains Bullish

Ahead of NVIDIA's November earnings report, Wall Street analysts continue to be bullish on the company. Currently, 67 analysts have given NVIDIA stock a "outperform" rating, 7 maintain a "hold" rating, and only one analyst recommends selling. According to Bloomberg's survey, analysts expect NVIDIA's stock price to rise to $148.37 in the next 12 months. Some analysts who are highly optimistic about NVIDIA include:

• Last Friday, Bank of America raised its NVIDIA target price from $165 to $190. Bank of America analyst Vivek Arya and others stated that buying NVIDIA is "a once-in-a-generation opportunity."
• Last week, investment research firm CFRA raised NVIDIA's target price from $139 to $160.

In the view of Bank of America analysts, the overall AI market demand is growing strongly. In addition, NVIDIA's strong performance in enterprise AI, such as partnerships with companies like Microsoft and Accenture, is another factor for Bank of America raising its target price. NVIDIA is the preferred partner for enterprise AI hardware and software.

Wedbush analyst and NVIDIA bull Dan Ives expressed similar views in a report to investors on Sunday. He stated that with the explosion of AI applications, enterprise spending is experiencing massive growth, and NVIDIA is in a leading position.

Ives predicts that from now until 2027, the AI infrastructure market will grow tenfold, with enterprises investing $1 trillion in AI capital expenditures during this period. "In short, we believe that tech stocks will see another 20% increase by 2025, as the tech bull market driven by the AI revolution is just entering the next phase. We believe that the Fed and Powell have initiated a proactive rate-cutting cycle, and a soft landing in the macroeconomy is still the way forward. Tech spending on AI is a cross-era spending wave that is just beginning in the tech industry."

Goldman Sachs stated that NVIDIA's pricing is reasonable, with its valuation close to the median P/E ratio of the past three years, and relatively lower compared to its peers. Goldman Sachs expects that based on Blackwell's product growth continuing as planned, the product's revenue will reach billions of dollars by the first quarter of next year, and will further increase after April Over the weekend, Tianfeng International's renowned analyst Ming-Chi Kuo released industry chain order information for NVIDIA's Blackwell GB200 chip, showing that Microsoft is currently the world's largest GB200 customer. In the fourth quarter of this year, orders surged 3-4 times, exceeding the total orders of all other cloud service providers. Kuo Ming-Chi stated:

The capacity expansion of Blackwell chips is expected to start in the early fourth quarter of this year. At that time, the shipment volume in the fourth quarter is expected to be between 150,000 to 200,000 units. It is expected that the shipment volume in the first quarter of 2025 will significantly increase by 200% to 250%, reaching 500,000 to 550,000 units.

Jensen Huang: Demand is "Insane"

Earlier this month, NVIDIA CEO Jensen Huang stated in an interview with the media that NVIDIA's Blackwell architecture chips have been "fully put into production," and the market demand for Blackwell chips is "insane." These chips are used by tech giants in data centers to power generative AI software. Huang's remarks boosted market optimism.

TSMC and Micron Boost AI Sector

Positive news from NVIDIA's industry partners has also boosted NVIDIA's stock price and the overall AI sector. For example, Micron, which provides memory chips for NVIDIA GPUs, and TSMC, which manufactures NVIDIA AI chips, both exceeded Wall Street's expectations in their recent financial reports. TSMC's performance in the third quarter was strong, and it raised its full-year revenue guidance to 30%, stating that AI demand is real, overall chip demand is stabilizing, and improving.

Earnings Season Approaching

Starting this week, several major tech companies in the US will sequentially release their earnings reports. These tech companies' financial reports may have a significant impact on NVIDIA's stock price.

NVIDIA's next test will be Tesla's earnings report released after the US market closes on Wednesday this week. Tesla is an important customer for NVIDIA. Tesla uses AI computing and relies on NVIDIA's GPUs to train its driver assistance products and humanoid robots it hopes to sell one day.

Tesla CEO Elon Musk said during the July earnings call, "We see very high demand for NVIDIA hardware, to the point where it's often difficult to get GPUs. I'm concerned about whether we can get them in time when we need GPUs."

Next, the earnings reports of other major NVIDIA clients such as Microsoft, Amazon, Google's parent company Alphabet, and Meta will also help investors predict NVIDIA's performance. The capital expenditures of these companies represent NVIDIA's sales revenue. Wall Street expects their combined capital expenditures for the quarter ending in September to exceed $60 billion, a 56% year-on-year increase.

Microsoft, Amazon, Alphabet, and Meta contributed over 40% of NVIDIA's total revenue in the second quarter. Investors hope to see these tech companies continue to increase spending, but they also need to pay attention to their focus on self-developed chips.

Market Margin for Error has Shrunk

According to forecasts by the consulting firm International Business Strategies that tracks industry data, the AI chip market is expected to grow by 99% in 2024 and another 74% in 2025 However, it is worth noting that any slight slowdown in NVIDIA's growth could lead to a decline in its stock price, as investors were not satisfied with its performance in the last NVIDIA earnings report.

On Monday, Susquehanna analyst Christopher Rolland maintained a "positive" rating on NVIDIA stock in a research report predicting semiconductor company earnings. "For AI, market checks remain solid, and we expect large-scale company capital expenditures to be adjusted. In other words, the standards for most AI stocks have been raised, and it may be necessary to raise previous performance guidance to support stock prices."

Bloomberg's tracking data shows that Wall Street analysts expect NVIDIA's third-quarter earnings per share to reach $0.74, an 84% year-on-year increase. They expect revenue to grow by 83% to reach $33.1 billion