Nvidia stock rallies after CEO cites magnitude of chip demand

Shares of Nvidia (NVDA) closed nearly 8% higher in Wednesday's trading session after CEO Jensen Huang touted extraordinary demand for AI chips at the Goldman Sachs Communacopia and Technology Conference. Huang particularly noted that the chip demand is "intense" and that "everybody is counting on us."

Morning Brief Hosts Seana Smith and Brad Smith report more on the story and the heated competition among chip players as they each fight for market share of the chip trade.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Melanie Riehl

Video transcript

All right, let's talk about NVIDIA as well.

Here.

Shares are relatively flat in pre market trading after closing higher by 8% on Wednesday.

The search coming after CEO Jensen Huang touted the extraordinary demand for A I chips at the Goldman Sachs, Communic Copia and Technology Conference on Wednesday.

Demand is so great that that delivery of our components and our technology and our infrastructure and software is really emotional for people because it directly affects our revenues.

It directly affects our competitiveness, Huang, pointing to the intensity of the demand being so great that their customers get emotional when the supply can't always meet what they want here.

And that demand has certainly benefited NVIDIA to this point.

And some of the entrenchment that they've been able to put forward for themselves has really come back to C a which we've talked at length with several analysts about Stacey Razon, one of them We talked about C A with and how that compute unified device architecture would sense for how that's really been part of the thesis around NVIDIA, but then you start to think about OK.

If NVIDIA is unable to meet some of that demand who were some of the other players that could win, or at least take some market share in the near term period.

Is it competitors like a MD?

They have a company that they bought called ZT Systems helps bring in systems expertise.

Um, it was kind of a an engineer acquisition, but all all these things considered an aqua hire, as some people would call it, all these things.

It's looking at some of the other stock plays that could potentially benefit, as NVIDIA is trying the best it can to meet demand and where other players can at least pick up some of the the chips that are falling off their plate.

Yeah, and I think that's exactly been the narrative surrounding NVIDIA stock, right?

Just the fact that they have such a dominant position right now, when you take into account the estimates here for a I grows down the line, the chip sector exactly their role clearly critical here to the adoption of a I going forward.

NVIDIA is far from the only name in the game right now.

They are the leader, but there certainly are other opportunities for some of those smaller players.

Relative to NVIDIA to chip away at that market share.

But I think just taking a look at the move yesterday the significance of an 8% pop on the heels of really Jensen Wong almost just reiterating what we've heard time and time again.

Yes, he did say some interesting commentary when it comes to the fact that customers are a bit more emotional because they everyone wants to be first when it comes to this technology.

But the fact that he did once again reiterate that Quote Unquote Inc demand for chips also went on to talk about the fact that every dollar a company spends on NVIDIA infrastructure could be turned into $5 in cloud computing revenue.

And I think that almost validates some of the concerns that have been validates.

The initial euphoria that we did see play out within the A I trade.

It almost puts to ease some of those concerns that we did have over the last several weeks.

When it comes to I guess how quickly some of these companies are able to make money when it comes to their A I investments.

All right, we're gonna get investors take on the chip demand picture.

Later on this hour, we will be speaking with John Vin.

He's key bank capital markets equity research analyst.

That's coming up in just about 30 minutes.