Once again, NVIDIA and Jensen Huang have become the "big saviors" of the US stock market

On Wednesday, September 11th, during the midday session of the US stock market, NVIDIA CEO Jensen Huang engaged in a dialogue with Goldman Sachs CEO Solomon at a technology conference organized by Goldman Sachs. His comments on the "huge demand for AI chips" leading to "tension in NVIDIA's customer relationships" sparked a surge in the US stock market, causing major stock indices to completely erase their intraday losses by the closing bell and achieve a V-shaped rebound, with the technology and chip sectors leading the way.

NVIDIA initially saw a slight decline in the early trading session on the US stock market, dropping below $107. However, as Huang's speech continued, the gains kept expanding, reaching new daily highs by the closing bell. The stock surged as much as 8.4%, briefly surpassing $117, with the amplitude from the daily low to high reaching as high as 9%. NVIDIA closed up 8%, marking its largest gain in six weeks, rising for three consecutive days and recovering most of the losses since August 30th.

Driven by NVIDIA's sharp rise as a "market lifesaver," the S&P 500 index reversed from an initial 1.6% decline to a gain of over 1%, the Dow Jones Industrial Average turned around from an early drop of nearly 744 points or 1.8% to a 0.3% increase, reclaiming the psychological threshold of 40,000 points. The Nasdaq Composite surged over 2%, with an amplitude of over 630 points or 3.8% from the daily low to high. The Russell 2000 small-cap index reversed from a 1.8% decline to a 0.3% gain, the Nasdaq 100 turned from a 1.6% drop to a 2.2% increase, and the Philadelphia Semiconductor Index surged nearly 5% after initially falling 1.4%.

Analysts pointed out that this is the first time since October 2022, nearly two years, that the S&P 500 and Nasdaq 100 indices have completely erased intraday declines of at least 1.5%. In other words, NVIDIA and Jensen Huang, single-handedly, managed to overcome the entire impact of the heavy August CPI inflation data on the US stock market earlier in the day.

The notoriously outspoken financial blog Zerohedge stated that after the US stock market collectively dropped over 1% and headed towards the lows following last Friday's non-farm payroll data, the situation was once again saved by a single sentence from Jensen Huang, "In any case, all the market hears is 'strong demand.'"

Wall Street News summarized Jensen Huang's remarks on Wednesday, with the most memorable statement being that the AI chip Blackwell is so hot that it has left customers dissatisfied, making NVIDIA's products the most sought-after in the tech industry, leading to competition among customers for limited supply

"Everyone is counting on us... The demand for our products is so high, everyone wants to be the first to get them, to get the largest share. Today we may have more emotional customers, which is understandable. The relationship is very tense, but we are trying our best to do our best."

He also mentioned:

"We bear the responsibility of many people, everyone is counting on us. The demand is so high that the delivery of our components, technology, infrastructure, and software is really an exciting/emotional thing for people. Because this directly affects their income, directly affects their competitiveness. You know, this situation is happening all over the world, everything is sold out. So, this demand is simply incredible."

After last week's plunge, Jensen Huang's speech is seen as an opportunity to calm investor nerves and address the big question about "AI demand"

Some analysts pointed out that following last week's Nvidia's plunge of about 14% and a market value evaporation of $400 billion, Jensen Huang's keynote speech is seen as an opportunity to calm investor nerves. Despite recent sell-offs, Nvidia's stock price has still risen nearly 150% in the past 12 months.

In the past two weeks, Nvidia's stock price has dropped by 20%, mainly due to concerns that the artificial intelligence investment frenzy that has been driving the market up since the launch of ChatGPT in November 2022 may soon start to fade.

On one hand, many are worried that economic slowdown will hinder the continuous rapid growth of artificial intelligence demand. At the same time, investors in Nvidia's products face a major question: Can AI generate enough revenue to justify the massive investment in GPUs and other artificial intelligence hardware?

Therefore, Jensen Huang's latest speech "addresses the big question in investors' minds," his emphasis on "the magnitude of demand," and even the somewhat boastful exaggerated descriptions, happen to be the key drivers behind Nvidia and the U.S. stock indices' major turnaround. Jensen Huang also informed the audience that generative artificial intelligence is still in its early stages, and it will expand into more areas outside of data centers, igniting imagination for future growth.

Barron's Weekly noted that the strong financial report from software giant Oracle this week reminds people that the demand for Nvidia's artificial intelligence-related chips is expected to remain strong, a trend confirmed by Jensen Huang today. In addition, Musk's startup xAI is heavily using Nvidia GPUs to build its Colossus AI training infrastructure, and Meta has long planned to purchase Nvidia's H1 chips worth billions of dollars by the end of this year. These large tech customers with expansion plans are enough to make Nvidia dominate the AI chip market.

Mainstream investment banks have differing views recently, with Goldman Sachs still bullish, Barclays calling for calm, and Citi stating that Nvidia is no longer the top choice for AI stocks

Goldman Sachs' renowned analyst Toshiya Hari maintained a "buy" rating on Nvidia this week, citing that the Goldman Sachs team believes Nvidia's stock was oversold last week, with the reason being "demand has remained strong":

"Firstly, the demand for accelerated computing remains very strong. We have previously focused on the AI chip demand from super-scale cloud providers such as Amazon, Google, Microsoft, but you will see the demand expanding to other enterprises, and even sovereign nations

">> (Note from Wall Street News: Hyperscalers mainly refer to cloud computing platform service providers with multiple data centers and server numbers as high as tens of thousands or even millions, also translated as "super-scale operators".)Goldman Sachs believes that NVIDIA's sell-off began with the company's positive financial report released on August 28th not meeting Wall Street's extremely high expectations, such as revenue exceeding expectations by nearly 4.1 percentage points, the smallest proportion since the fourth quarter of the 2023 fiscal year. The biggest debate surrounding NVIDIA at the moment is whether its profit momentum can continue in 2025, or even in 2026:> "Since early 2023, investors' attitude towards artificial intelligence has undergone a nearly 180-degree shift. Investors' patience is running out, they want to see - not be told - the increase in revenue sources and profit margins driven by artificial intelligence.>> However, with profound generational technological changes such as artificial intelligence, making judgments based on short-term costs and returns is futile. The focus is on long-term goals. Goldman Sachs estimates that starting from the second half of 2025, generative AI will begin to make a substantial contribution to industry growth.>> Therefore, Goldman Sachs believes that NVIDIA's competitive position remains very strong. We do believe that in the field of commercial silicon, NVIDIA is the preferred choice, even compared to custom (self-developed) silicon, they also have an advantage in innovation speed."However, Citigroup's US stock strategist Scott Chronert warned last week during NVIDIA's sharp decline that NVIDIA may be becoming a large growth stock that is no longer exciting and straightforward:> "Simply looking at the deceleration in the growth rate of performance outlook guidance, one can see that its most profound performance and fundamental impact on the market trend may have passed."The bank's view is that the expectation of the Federal Reserve starting to cut interest rates is accelerating the rotation of funds out of the once dominant tech leaders, although it still predicts strong profit growth for NVIDIA, the future NVIDIA will not continue to be a huge driving force for S&P market returns. The sell-off after its "profit steady but not outstanding" financial report indicates that the semiconductor giant's position as a major darling of the market in AI is fading, and in contrast, Apple has replaced NVIDIA as the top AI stock for Citigroup's US stock team.In addition, Barclays analysts also stated in June that, based on their preliminary estimates, by 2026 the AI capital expenditure of hyperscale cloud providers is probably sufficient to support existing internet and 12,000 new AI products similar in scale to ChatGPT:> "But will this happen? Silicon Valley is hotly discussing AI changing the world, and we do expect many new services to reveal some bullish cases, but there may not need to be as many as 12,000."