Technology
Is This the Real Reason NVIDIA's Stock Surged 4% on Tuesday?
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On Tuesday NVIDIA (Nasdaq: NVDA) shares surged 3.97%, significantly outpacing the Nasdaq’s 0.56% gains. Many investment websites pointed to CEO Jensen Huang ending a stock sale program as the catalyst for the company’s gains. However, other news might be a larger factor in today’s gain.
Let’s look at why NVIDIA surged today and whether the news could lead to gains in the months ahead.
Earlier this year, Jensen Huang began a share sale program. These programs are common for CEOs, but Huang’s had a limit of about 6 million shares. As of Huang’s September 13th sale (which you can see the details of on the SEC’s website), he reached the limit of this 10b5-1 plan.
There are dozens of media reports speculating that the end of this plan led to NVIDIA’s jump today. However, it’s worth noting:
Put more simply, as far as CEO stock sales go, a sale of less than 1% of Huang’s shares accounting for .02% of NVIDIA’s volume doesn’t seem as material as the headlines make it out to be.
Another interesting facet of NVIDIA’s trading on Tuesday is that the company’s share price was $115.70 at 10:40 before rapidly climbing over $121 per share by noon.
It seems some news rapidly caused buying activity in NVIDIA’s shares.
One very intriguing research note around NVIDIA came from Morgan Stanley today. The researcher noted that NVIDIA’s next-generation Blackwell chips are now entering volume production.
Morgan Stanley believes NVIDIA could produce 450,000 chips in the fourth quarter of 2024, translating to a ‘potential revenue opportunity exceeding $10 billion’ for NVIDIA. This is a very important note as NVIDIA guided in their most recent earnings that they’ll see a ‘few billion’ in revenue from Blackwell in the fourth quarter.
If Morgan Stanley is right, NVIDIA may be ahead of schedule, which could lead to a large fourth-quarter earnings surprise (it would seem from Morgan Stanley’s estimates the company could exceed prior Blackwell revenue in the fourth quarter by $7 billion).
In addition, Morgan Stanley noted NVIDIA continues to see strong demand for its prior generation H200 chips selling to hyperscalers and sovereign AI projects.
Reading the tea leaves on why a stock jumps any particular day is an inexact science, but when I look across NVIDIA news, my guess is that Morgan Stanley’s research note is the primary driver for NVIDIA’s stock surge today.
If they are ahead of schedule, traders are likely trying to position themselves ahead of rising expectations for NVIDIA earnings in the fourth quarter.
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