Nvidia's Stock Rises as CEO Discusses High Demand for AI Chips

Market Stabilizes Thanks to Nvidia

For the second consecutive day, the market required a stabilizing force and found it in Nvidia. The company was scheduled to present at the Goldman Tech conference in San Francisco, an event that was anticipated to have a significant impact, potentially more so than the Consumer Price Index (CPI) print.

Nvidia CEO's Remarks Boost Stock

As stocks were on the decline and looked set to drop below Friday's lows, a comment from Nvidia CEO Jensen Huang provided the much-needed boost. As reported by Bloomberg, Huang stated that the demand for chips is so high that "everyone wants to be first and everyone wants to be most." He further noted that customer relations are currently tense due to the intense demand, but the company is doing its best to meet the needs.

Nvidia's Dependence on Taiwan Semiconductor

Huang also highlighted Nvidia's reliance on Taiwan Semiconductor for the production of its most crucial chips. This is due to the company's superior quality in the field. However, geopolitical tension has increased risks. China views TSMC's home island as a rogue province, which raises concerns about potential attempts to reclaim the territory, potentially cutting off Nvidia from its key supplier.

Potential for Supplier Switch

Despite the risks, Huang stated that Nvidia develops much of its technology in-house, which could allow the company to switch orders to alternative suppliers if necessary. However, such a change could lead to a decrease in the quality of the chips. He praised TSMC's responsiveness to Nvidia's needs, but also noted that other suppliers could be considered if necessary.

Market Reaction to Nvidia's Demand

The market's primary takeaway from Huang's comments was the high demand for chips, which led to a surge in Nvidia's stock from a session low of $107 to a session high of $113. This also contributed to the broader market reaching session highs, with the NASDAQ 100 erasing declines and gaining 0.1%.

Bottom Line

It's clear that Nvidia's role in the market is significant, with the company's updates having a substantial impact on stock trends. The high demand for chips, coupled with geopolitical tensions, presents both opportunities and challenges for the company. What are your thoughts on this development? Do you think Nvidia's reliance on Taiwan Semiconductor is a risk worth taking given the current geopolitical climate? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, available every day at 6pm.