Nvidia investors look forward to seeing if Jensen Huang's CES speech can spark the next major market breakout.

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Record Close, Robust Demand, and Supply Constraints

On Monday, Nvidia Corp. investors are eagerly anticipating a fresh breakout in the chipmaker’s shares following CEO Jensen Huang’s keynote speech at the closely-watched CES trade show in Las Vegas. Despite ending the year at its first record close since November, the stock has seen some lull in recent weeks.

Blackwell Chip: The Next Major Growth Driver

Investors will be focusing on any commentary from Huang regarding the Blackwell chip, considered Nvidia’s next major growth driver. While robust demand remains strong for the chips, supply constraints due to manufacturing challenges have slowed its rollout. Despite these setbacks, analysts believe that demand for Blackwell will remain exceptional.

History of Success: Past Six Months

The past six months have been a testament to Huang’s ability to boost the stock with his comments about demand for the chips. In October, he called Blackwell demand "insane," and in November, he said the chips are shipping in the current quarter amid "very strong" demand. The shares posted a monthly loss in December but still gained 171% in 2024, making them by far the biggest single driver of the S&P 500 Index’s overall gain.

Valuation Concerns

The stock is already up 11% this year and trades at a market capitalization of $3.66 trillion, close to re-overtaking Apple Inc. as the largest company with a market cap of $3.7 trillion. Despite its gains, Nvidia remains one of the most expensive Nasdaq 100 Index components by valuation metrics.

What’s Next?

Investors are eagerly anticipating Huang’s keynote speech at CES, where he will likely discuss the Blackwell chip and its prospects for growth. Analysts believe that demand for Blackwell will remain strong despite supply constraints.

Earnings Disappointment: The November Report

In November, Nvidia’s revenue forecast failed to impress Wall Street, which had become accustomed to projections that topped average estimates by wider margins. This lull in the shares has been attributed to excitement about AI spending spreading to other areas of the semiconductor industry.

Broadcom Inc.: A Competitor’s Gain

Broadcom Inc. shares have soared more than 30% in the past few weeks after projecting a boom in the market for AI components that it designs for data-center operators. Marvell Technology Inc. shares have rallied more than 20% since it reported better-than-forecast earnings on demand for its custom AI chips.

A Wealth Transfer?

Morgan Stanley analysts led by Joseph Moore likened the rallies in those stocks to a wealth transfer from Nvidia, whose shares sank for four consecutive days in the wake of Broadcom’s report, shedding more than $200 billion in market value. Despite this, Nvidia remains a top pick at Morgan Stanley.

Supply Constraints and Mid-Year Focus

The analysts argue that the chipmaker will take market share this year and are looking to Huang’s keynote speech as a "positive event." They expect him to reiterate that Blackwell demand is exceptional but supply constrained. By mid-year, they remain comfortable that the focus will remain on Blackwell, which will be the driving force behind revenue in the second half of the year.

High Stakes: CES Event and Huang’s Keynote

Jordan Klein, a tech-sector specialist at Mizuho Securities, sees the CES event and Huang’s keynote as tests of near-term sentiment and risk appetite toward tech. If the stock drops or fails to meet expectations, it could lead to a broader market sell-off.

Earnings Due Monday: No Major Earnings Expected

No major earnings are expected this week, but investors will be closely watching Huang’s keynote speech at CES for any updates on the Blackwell chip and Nvidia’s prospects for growth.