Shares of Nvidia (NASDAQ: NVDA) rose today on several news items, including a cooler-than-expected inflation report this morning, a well-received presentation at a Goldman Sachs conference this morning, and news that the federal government may allow chips to be exported to Saudi Arabia. As a result, the stock closed up 8% on the news.
Chip stocks also rose significantly on the inflation report, with the iShares Semiconductor ETF 4.6% up on the news, and the Nasdaq Composite rose by 2.2%.
Falling interest rates are good for Nvidia
Investors seemed unsure whether the CPI report, which showed inflation rose just 2.5% year-on-year in August, was good news for stocks, but the Nasdaq rose sharply in the afternoon, led by Nvidia.
The Federal Reserve is expected to cut rates next week, but investors aren’t sure whether they’ll cut rates by 25 basis points or 50 basis points. Ideally, interest rates would fall while the economy remains strong or even gets stronger. That would be the best-case scenario for Nvidia, as lower rates make growth stocks more valuable and should encourage borrowing for investments in artificial intelligence (AI) infrastructure, meaning spending on Nvidia components.
Speaking at Goldman Sachs’ Communacopia conference, Nvidia CEO Jensen Huang didn’t offer big news but praised the company’s technology and the future of generative AI, noting the company’s assets, including its software libraries for applications like autonomous driving and climate technology. He also added: “The demand is so high that the supply of our components, our technology, infrastructure and software is really emotional for people because it directly impacts their revenues. It directly impacts their competitiveness.”
Finally, according to a report from Semafor, the federal government is considering allowing Nvidia to export cutting-edge chips to Saudi Arabia, which it would use to train advanced AI models. While Saudi Arabia isn’t a large market, the loosening of export regulations would benefit Nvidia and could lead to the opening of other markets.
Will Nvidia Keep Growing?
It looks like there is a tailwind for the company as falling interest rates will support its investments and valuation. The company will also release the Blackwell platform in Q4 and will be reaching out to its key customers, including tech giants such as Microsoft, Meta platformsAnd Alphabethave all indicated that investing in AI infrastructure is a top priority.
Even after today’s gains, Nvidia stock is still down 17% from its June peak, leaving room for more gains. The stock still looks like a good bet to outperform, even after soaring over the past two years.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former chief marketer and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Goldman Sachs Group, Meta Platforms, Microsoft, Nvidia, and the iShares Trust – iShares Semiconductor ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Why Nvidia Stock Went Higher Today was originally published by The Motley Fool
