TLDR
- Nvidia stock continues climbing towards $5 trillion valuation after recently passing $4 trillion mark
- Investor believes AI infrastructure spending will keep accelerating, driven by compute scaling needs like Grok 4’s development
- Company ordered 300,000 H20 chips for China market, adding to existing stockpile of 600,000-700,000 units
- Trump administration reversed export restrictions on H20 chips, which had cost Nvidia $10.5 billion in revenue
- Wall Street maintains Strong Buy rating with 34 Buy recommendations versus only 4 Hold/Sell ratings
Nvidia stock climbed 1.4% in premarket trading Tuesday, reaching $179.23 as the company races toward a $5 trillion valuation. The chip giant has been on a tear, recently breaking through the $4 trillion mark just weeks ago.
The latest gains come as Nvidia positions itself to capture massive demand from Chinese markets. Reuters reported the company placed orders for 300,000 H20 chips specifically designed for China.
This order adds to an existing stockpile of 600,000 to 700,000 units. The move comes after strong demand signals from Chinese buyers who have been eager to access Nvidia’s AI technology.
The timing couldn’t be better for Nvidia’s China strategy. The Trump administration recently reversed export restrictions on the H20 chip that had been costing the company serious money.
Those export curbs had hit Nvidia’s bottom line hard. The company reported losing $10.5 billion in revenue across its April and July quarters due to the restrictions.
AI Infrastructure Race Heats Up
One prominent investor sees no end to the AI spending spree that’s been driving Nvidia’s success. Simple Investment Ideas, a 5-star rated investor, points to recent developments like Grok 4 as proof the infrastructure race is just getting started.
“AI progress is driven primarily by scaling compute and data, not by new algorithms,” the investor explains. Grok 4’s performance jumps demonstrate how much raw computing power these new models demand.
The energy numbers tell the story. Training Grok 4 consumed 6 GW-hours of electricity – enough to power an entire city for a full day.
That level of power consumption shows why companies are scrambling for Nvidia’s energy-efficient accelerators. The Blackwell GB200 platform extends these efficiency gains even further.
CUDA Platform Creates Sticky Advantage
Nvidia’s software ecosystem gives it staying power beyond just hardware sales. The CUDA platform has become the standard foundation for AI development across universities and corporations.
This integration runs deep, from low-level optimization all the way up to high-level applications. Thousands of software vendors and engineers have standardized on Nvidia’s stack.
That creates switching costs for competitors trying to lure customers away. Once developers build on CUDA, moving to alternatives becomes expensive and time-consuming.
The hyperscalers understand this dynamic. Simple Investment Ideas notes they’re incentivized to over-order GPUs rather than risk falling behind competitors.
This arms race mentality plays directly into Nvidia’s hands. Companies would rather have excess capacity than lose ground in the AI race.
Wall Street analysts seem convinced the momentum will continue. The stock holds a Strong Buy consensus with 34 Buy ratings against just 3 Holds and 1 Sell.
Other chip stocks rode Nvidia’s coattails higher Tuesday. Advanced Micro Devices gained 1.6% while Broadcom added 0.8% in premarket trading.
Nvidia’s stock closed Monday at another record high, gaining 1.9%. The company has weathered early 2025 concerns about excessive AI spending by hyperscalers as those same companies ultimately confirmed massive investment plans.
Taiwan Semiconductor Manufacturing, which produces the H20 chips for Nvidia, saw its shares decline 1.16% as investors digested the production ramp-up news.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
