Nvidia (NASDAQ: NVDA) Stocks just keep rising. Today’s increase of about 7% as of 1:00 PM ET was not due to new information from the company. Nvidia published its quarterly results last week and shares jumped on the news.
But today’s move — and the reason why Nvidia stock may continue to rise — stems from another company’s announcement today. Nvidia’s sales have soared and now investors see a new multi-billion dollar customer entering Elon Musk’s xAI.
How can Nvidia be worth so much?
Nvidia shares soared as it started making money selling its processors used for artificial intelligence (AI) applications. Sales of its GPUs continue to rise, with the company saying sales will more than double in the current quarter compared to the same period a year ago.
Those sales go to a wide range of technology companies that are building AI-sized language models and vastly increasing computing power. Last year, many well-known companies were among the top customers of Nvidia’s GPU offerings.
But while a company owned by Elon Musk (Tesla) was on that list, another just announced it has raised $6 billion in new capital. And many expect that much of the money xAI just raised will be spent on Nvidia’s processing chips.
xAI is Musk’s start-up that focuses on the development of artificial intelligence. It just announced a new round of funding this weekend that raised $6 billion and valued the privately held company at about $24 billion, according to Musk. Reports indicate that xAI plans to build a supercomputer to power a new version of xAI’s chatbot called Grok. xAI can collaborate with Oracle using potentially tens of thousands of Nvidia chips.
With xAI not even among the top ten customers for Nvidia’s H100 GPUs in 2023, the news makes investors optimistic that the demand gap for Nvidia’s AI chips has a long tail. That’s why the stock remains a buy even after recently rising to all-time highs.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Howard Smith has positions in Alphabet, Amazon, Microsoft, Nvidia and Tesla. The Motley Fool holds positions in and recommends Alphabet, Amazon, Baidu, Meta Platforms, Microsoft, Nvidia, Oracle, Tencent and Tesla. The Motley Fool recommends Alibaba Group and recommends the following options: long January 2026 $395 calls at Microsoft and short January 2026 $405 calls at Microsoft. The Motley Fool has a disclosure policy.
Prediction: Nvidia Stock Will Keep Rising…and Here’s Why was originally published by The Motley Fool
