Nvidia Stock Surges Over 20% in Five Weeks: Why Analysts Consider It a Strong Buy

Nvidia (NVDA) is currently at the forefront of a major shift in technology, largely driven by rapid advancements in artificial intelligence (AI). With its stock skyrocketing more than 20% in just the past five weeks, Nvidia’s performance has caught the attention of investors and analysts alike.

Investors usually celebrate a 20% increase in stock value over the course of a year. However, Nvidia has achieved this gain in a matter of weeks, sparking interest among Wall Street analysts about the company's potential for further growth.

What Fuels Nvidia's Recent Gains?

The catalyst behind Nvidia's notable rise can be summed up in one word: Blackwell. In a recent interview with CNBC, Nvidia’s CEO Jensen Huang described the demand for the new Blackwell AI chip as "insane," noting that companies are eager to adopt the latest technology.

The Blackwell architecture represents a significant leap forward in computing power. When Nvidia debuted this new GPU architecture earlier this year, it claimed that Blackwell would "power a new era of computing." This was not mere marketing hype.

Blackwell is designed to efficiently run large language models that can process up to 1 trillion parameters while consuming significantly less energy and costs compared to its predecessor, the Hopper platform. Major tech giants like Alphabet, Amazon, Meta Platforms, Microsoft, Oracle, and OpenAI have already signaled their intent to utilize this innovative technology.

Although Nvidia's stock has rapidly increased, it did face a minor decline following reports that the U.S. government may implement export restrictions on advanced AI chips to certain Middle Eastern nations.

Why Analysts Believe Nvidia Will Continue to Rise

The average price target for Nvidia's stock over the next 12 months suggests an upside potential of almost 14%, according to LSEG data. One optimistic analyst even predicts the stock could rise by as much as 55% within the same period.

Despite the stock's rapid appreciation, analyst enthusiasm for Nvidia appears to have somewhat softened. In September, 55 out of 60 analysts rated Nvidia as a "buy" or "strong buy." However, a more recent survey in October reflected that only 22 out of 38 analysts maintained a similar outlook.

The persistent positive sentiment stems from Nvidia's commanding presence in the AI chip market. Despite competition, Nvidia's GPUs are regarded as the industry benchmark for training and deploying AI models.

Analysts from Morgan Stanley are particularly bullish, noting that the Blackwell GPUs are already sold out for the next year. Analyst Joseph Moore highlighted that all signals from Nvidia's management suggest we are still in the early stage of a long-term investment cycle in AI. Morgan Stanley has labeled Nvidia as a "Top Pick."

Will Analysts' Predictions Hold True for Nvidia?

It remains to be seen if Wall Street's prediction of a 14% increase for Nvidia within the year will become a reality. However, some experts believe this target may be overly cautious.

Nvidia has yet to report sales figures for its Blackwell chips, and as the results roll in, it's likely that several analysts will adjust their price forecasts upward. The ongoing AI revolution is still in its early phases, as noted by Morgan Stanley's Moore. Nvidia is poised to remain a key player in this transformative era for the foreseeable future.

Nvidia, Stock, AI