Shares of Nvidia (NVDA -2.09%) are up 170% in 2024 (at the time of this writing). The monster year comes on the heels of an even bigger 2023 that saw the stock rocket up nearly 240%. All told, shares of the artificial intelligence (AI) juggernaut are up more than 900% since its low in late 2022. Given this incredible performance, is it too late to buy?
Far from it. There are all kinds of reasons I could give for why Nvidia will continue to beat the market, but for my money, the biggest reason is simple: Demand remains incredibly strong for its chips.
Blackwell is coming
I would be concerned if there were signs that demand for the company's graphics processing units was softening, but there really isn't. Demand for its current Hopper chips is still robust; the company expects sales to continue well into the next year even as it prepares to launch Hopper's successor, Blackwell.
And demand for the new chips is "insane," according to CEO Jensen Huang. So much so that despite efforts to expand capacity by building a new Blackwell-specific factory in Mexico, the next-generation chips are reportedly sold out through the end of 2025.
The biggest CEOs in tech are lobbying Nvidia to get their hands on enough Blackwell chips to satisfy their data center building programs. Elon Musk wants to purchase an enormous amount of the chips to expand his xAI flagship supercomputer.
His aptly named Colossus is already considered the largest AI computer in the world with 100,000 Hopper chips. Musk wants to expand that to 1 million chips, most of which would be Blackwells. Whether that's even possible -- or at least by when -- remains to be seen, but hopefully it illustrates the scale of demand.
Musk isn't alone. He may be the most publicly vocal, but in their latest earnings calls, the management of Nvidia's largest customers -- like Meta and Alphabet -- made it clear they intend to keep the money flowing to maintain their massive capital expenditures for data centers.
