"Like its fellow Magnificent 7 members, Nvidia struggled due to economic uncertainties about the effects of tariffs, as well as due to Chinese AI innovations. Bears saw Nvidia stock falling further because of bearish pressure from the broader market. Yet, some investors remain optimistic for a sustained rebound, and lately that seems to have been the case. The stock returned to all-time highs as some tariff fears dissipated and macro data improved, and Nvidia became the first $5 trillion market cap company."
"The bearish argument that prevailed on Wall Street early this year is not entirely gone, though. While the AI rally may continue, it remains speculative, whereas the reasons for Nvidia stock's decline in the spring were genuine. Given challenges such as being effectively locked out of China, Nvidia may still be at a crossroads right now. We do not know for sure where the stock will go next, but with the data on hand, we can speculate. That's what we are doing here."
"AI Infrastructure Dominance: Nvidia controls an estimated 80% of the AI accelerator market through its H100/H200 GPUs and CUDA software ecosystem. It is tough for Nvidia customers to switch to another supplier. This has allowed the company to dominate the industry, with customers returning year after year. As such, it is well-positioned to capture growth from the $400 billion AI chip market projected for 2030."
The trade war with China pushed Nvidia shares to a year-to-date low below $87 in April, but the stock later returned to all-time highs as tariff fears eased and macro data improved, making Nvidia a $5 trillion company. The bearish case that caused the spring decline remains partly valid, with concerns about effective exclusion from China and speculative aspects of the AI rally. Three key drivers through 2030 are AI infrastructure dominance (about 80% share via H100/H200 GPUs and CUDA), rapid data-center revenue expansion (from $4.3 billion in Q1 2023 to over $35.6 billion in Q4 2024), and questions about margin preservation.
Read at 24/7 Wall St.
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