Nvidia Investors Look to DC ‘Super Bowl’ to Juice Sluggish Stock
(Bloomberg) — After years of leading the stock market, Nvidia Corp.’s wild rally took a break over the summer. Now Wall Street is looking for some DC magic to get the shares running again.
The chip giant’s three-day artificial intelligence conference called “GTC” began Monday in the US capital, and all eyes will be glued to the keynote address by Chief Executive Officer Jensen Huang scheduled for midday Tuesday. While GTC events have been held in Washington before, this is the first one to feature a keynote from the CEO. And some investing pros see the location as significant.
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“GTC is sort of the AI Super Bowl,” said Gerry Sparrow, who oversees about $120 million as chief investment officer of the Sparrow Growth Fund, which owns Nvidia shares. “The fact that it’s in DC could be foreshadowing that something good will be announced.”
Not too long ago, a catalyst was the last thing Nvidia shares needed, as AI fever captured the market and placed the chipmaker at the center of the boom. The stock has been among the best performers in the S&P 500 Index in every year since 2022, and this year it was up 32% through the end of July. But since then it has gone from a sprint to a jog, rising 7.7% while the rest of the chip industry races ahead, with the Philadelphia Semiconductor Index jumping 28%.
Intel Corp. has been the big winner in the last three months, soaring more than 100% on the strength of a massive capital infusion that includes $8.9 billion from the White House in return for a 10% stake in the company. The shares were down roughly 1% through July this year. AI rivals Broadcom Inc., Applied Materials Inc. and Arm Holdings Plc are also far outpacing Nvidia since the start of August. And on Monday, Qualcomm Inc. climbed 11%, reaching its highest level since July 2024, after unveiling AI chips aimed at challenging Nvidia.
China has been a major overhang for Nvidia. In August, the company and AMD agreed to a controversial deal that gives the US government 15% of their revenues from Chinese AI chip sales. Over time, greater access to the Chinese market could add 10% to Nvidia’s roughly $4.7 trillion market capitalization, according to Sparrow. So with President Donald Trump in Asia this week and scheduled to meet with China President Xi Jinping on Thursday, investors are looking for something that will galvanize the stock again.
This is also behind the perceived symbolism of Nvidia holding its conference not far from the White House this week.
“I’m looking for a catalyst, whether that’s a deal like we’ve already seen it do with countries like Saudi Arabia, or clarity on policy regarding China, which would be a big opportunity,” Sparrow said.
The event “will convene government leaders, industry representatives, leading researchers, developers and academia for timely conversations on AI innovation and the United States’ role in the global AI landscape,” according to a Nvidia spokesperson.
Nvidia shares also could get a jolt this week from the quarterly results of its major customers, although the question is in which direction. Microsoft Corp., Alphabet Inc., Amazon.com Inc., and Meta Platforms Inc. are reporting on Wednesday and Thursday, and combined they represent more than 40% of Nvidia’s revenue, according to supply chain data compiled by Bloomberg. Super Micro Computer Inc., which is responsible for more than 8% of Nvidia’s top line, issued weak preliminary sales last week.
“There is a ton of circular AI money going around, and Nvidia is overly exposed to that having to come to fruition,” said Dan Sheehan, director of portfolio management at Telos Wealth Advisors, which has about $70 million in assets. “I’m interested in what Jensen has to say, but it will really be critical for us to see whether big tech’s incredible capex numbers get reaffirmed. The stock can really move once we get more guarantees of spending.”
From a valuation perspective, Nvidia shares appear to have room to rise. The stock trades at about 32 times estimated earnings, a discount to its five-year average of 39 and not far from the chip index’s multiple of roughly 29. By comparison, AMD trades at 44 times forward earnings, and Broadcom is at about 39.
In terms of fundamentals, Wall Street is anticipating good news for Nvidia investors, with the company projected to post a roughly 58% increase in revenue in its fiscal year, which ends in January. That’s more than twice the anticipated growth for the semiconductor industry in 2025, according to Bloomberg Intelligence.
“Between GTC and big-tech earnings, it’s possible Nvidia gets two positive catalysts this week,” Sparrow said. “It’s also possible it sees two disappointments, but the multiple is very reasonable at this growth. I would be a buyer on weakness.”
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Apple Inc. and Microsoft Corp. are inching toward a $4 trillion market value ahead of earnings later this week. In July, Nvidia became the first company in history to close above the $4 trillion level.
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–With assistance from Subrat Patnaik and David Watkins.
