Nvidia Stock: 3 Reasons the AI Superstar Can Move Higher in Q4

In case you had forgotten that the stock market still belonged to Nvidia (NASDAQ: NVDA), its CEO, Jensen Huang, reminded investors in a CNBC interview last week.

Demand for Nvidia's new Blackwell chip is "insane," he said, adding, "It [Blackwell] gives us an opportunity to triple down, to really drive the innovation cycle so that we can increase capabilities, increase our throughput, decrease our costs, decrease our energy consumption."

While the Blackwell platform is highly anticipated by both Nvidia's customers and the investor community, the AI chip pioneer's stock has been stuck in neutral for the past few months after it peaked in June.

Huang's latest comments helped spark a gain in Nvidia stock, but these three catalysts could power the stock even higher in the fourth quarter.

Image source: Nvidia.

1. Macroeconomic conditions are looking stronger

Lately, Nvidia has been largely immune from the vicissitudes of the macro-level economy. The company has reported five straight quarters of triple-digit percentage revenue growth as it tries to fill seemingly insatiable demand for its AI components.

While it's unlikely that either the Federal Reserve's interest rate cuts or the strong September jobs report will directly impact Nvidia's business, they should influence investor perception of the stock and valuation models related to it, as well as the capital expenditures of its key customers.

In other words, lower interest rates should help loosen the purse strings of companies investing in AI, and increasing confidence in the strength of the economy will also quell doubts about the AI boom, as the two trends can reinforce each other in a virtuous cycle. Additionally, lower interest rates tend to lead to higher valuations for growth stocks like Nvidia due to the nature of the discounted cash flow model. That alone could add buoyancy to the stock price.

2. AI events could trigger gains

Excitement for generative AI and its potential applications continues to build as the technology advances and companies deploy new products like Meta Platforms' new generative AI photo editor. The latest round of funding for OpenAI, which included an investment from Nvidia and valued the start-up at $157 billion, also shows that expectations for generative AI continue to grow.

Building on that momentum, there are a number of AI events scheduled in Q4 that could drive Nvidia stock higher. For instance, the AI summit Nvidia is hosting from Monday through Wednesday of this week will include presentations and live demos on topics like generative AI, remote sensing, robotics, industrial digitization, and beyond. The company isn't expected to release new products at the conference, but favorable responses from industry insiders could drive the stock higher, as could other surprise announcements.

The most anticipated AI-related event of the quarter is probably Tesla's robotaxi event, which is scheduled for Thursday. It's unclear what Tesla will unveil, but CEO Elon Musk has been talking up the idea that robotaxis will be transformative for his company for years now, so expectations are high.

Importantly, Tesla's self-driving systems rely on Nvidia's AI hardware, and Musk has sung the company's praises on several occasions. Autonomous vehicles could be the next major frontier for Nvidia and AI, and Huang said in an interview in May that Tesla was "far ahead in self-driving cars."

3. The Blackwell money is about to roll in

It will likely take a lot to impress Nvidia investors at this point, but Blackwell has yet to factor into the company's financial results. JPMorgan recently reaffirmed its expectations that Nvidia will generate several billion in sales from Blackwell in Q4, as it's still planning high-volume production of chips using the new platform this quarter. Morgan Stanley predicts more than $10 billion in Q4 revenue from Blackwell.

With the company's Q3 earnings report due out in November, investors should be mindful of the Osborne effect -- the tendency of customers who know that better new tech is just around the corner to cancel their planned purchases of the soon-to-be prior-generation option. In short, it's possible some buyers may be delaying some AI chip purchases until the Blackwell lineup arrives.

However, the new platform has the power to sustain Nvidia's soaring growth rate and advance generative AI applications, which would help assuage concerns about an AI bubble as companies are spending on AI infrastructure. However, there has yet to be a transformative and profitable use case for generative AI.

Right now, one thing is clear with Blackwell, however. There's no shortage of demand. As Huang told CNBC earlier, "Blackwell is as planned. Everybody wants to have the most and everybody wants to be first."

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Meta Platforms. The Motley Fool has positions in and recommends JPMorgan Chase, Meta Platforms, Nvidia, and Tesla. The Motley Fool has a disclosure policy.