Jensen Huang Says Blackwell AI Chip Demand is “Insane.”—Time to Buy NVDA Stock?

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Nvidia ( NASDAQ:NVDA ) CEO Jensen Huang silenced many AI doubters when he described demand for Blackwell chips, Nvidia's next-generation AI offering, as "insane." Indeed, Mr. Huang's words moved NVDA stock (and the broader basket of AI plays), which moved higher on the incredibly upbeat commentary.

Of course, it's pretty tough to gauge how demand will stack up with the current slate of expectations. After all, just how many times can a stock experience a triple-digit percentage point gain in any given year?

Though Nvidia stock's rally has lost some steam, with shares hovering at levels not seen since its June peak, the choppy sideways consolidation may very well set the stage for another big upward move at some point down the line, likely when we get a glimpse of the early Blackwell sales figures.

Until then, it's hard to know what to do with those shares of NVDA. Some folks will dismiss the Magnificent Seven firm as overdue for a brutal plunge. The stock's euphoric gains behind it certainly make the name a very high-risk type of investment. And while I do believe that Blackwell (and its eventual successor Rubin) will sell well, I have no idea if the results will be explosive enough to justify a continuation in Nvidia stock's incredible multi-year run. If the AI trade still has legs, perhaps it isn't too late to punch one's ticket to the Nvidia show.

For now, investors may wish to take Jensen Huang's word for it: demand for its next-generation AI chips is "insane." And it may stay just as insane as we move into 2025, a year that could see the big bets of AI firms begin to pay off.

• Nvidia stock's starting to heat up again, thanks in part to recent comments made by its CEO.
• The stock still seems worth buying if you believe in the AI narrative and Nvidia's growing lead.
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If you managed to buy NVDA shares amid the summertime pullback, you're probably sitting on a nice gain. It was pretty scary to be a buyer, as the stock briefly entered a bear market (a 20% decline from peak to trough), but if you still believed in the long-term AI growth narrative despite mixed signals arising from some of the other AI plays in the market, you may have found that NVDA stock was unfairly placed in the bargain bin.

Even after gaining close to 35% from those August lows, it's hard to definitively say that NVDA stock is expensive. For a hyper-growth stock with a growing competitive lead, a 33.6 times forward price-to-earnings (P/E) multiple isn't just reasonable. It's cheap. Of course, cyclical firms, like the chipmakers, tend to look cheap until they aren't.

Cyclical booms tend to drive down P/E ratios, making companies look far cheaper than they are, while firms coming off cyclical busts tend to appear expensive or complicated to value if there's no P/E ratio to gauge. Given the state of the global AI scene today, I'd be inclined to view the AI chip giants as still in the early innings of the cycle.

Recently, Citi's Atif Malik reiterated his buy recommendation and $150 price target, citing his belief that AI adoption is in the third to fourth innings. I think Malik, who's been bullish on NVDA stock on the way up, will proven right once again. We're likely not yet halfway through the Nvidia ballgame, yet some people are leaving the stadium during the commercial break.

Undoubtedly, many tech companies outside of the Magnificent Seven have yet to scratch the surface of AI's potential, at least in my humble opinion. As the financial benefits of AI investments become more apparent in the coming quarters, perhaps we'll witness a Blackwell boom that may surpass estimates as they stand today.

Over the near term, however, I'm unsure whether an NVDA stock breakout is coming. In any case, if you're looking to invest in the name for the long run, it really shouldn't matter if we're on the cusp of a breakout.

Can Nvidia Pull Further Ahead in the AI Chip Race?

I'm not one to be tempted by euphoria-driven momentum trades. But I think Nvidia is different. It's making big money in the early days of the AI boom. And as the firm itself uses AI to advance its AI hardware innovations, perhaps the company has what it takes to leave its competitors behind as its offerings improve exponentially.

"If we can increase the performance as we've done with Hopper to Blackwell by two or three times each year, we're effectively increasing the revenues or the throughput of our customers on these infrastructures by a couple of times each year," said Huang.

That's a blistering pace that many still may discount at current prices.

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