Nvidia's Next Move: Can the AI Chip Leader Continue Its Surge Amid Supply Constraints?

As two top Wall Street analysts issued new target price updates ahead of Nvidia's (NVDA) Q3 earnings report next week, Nvidia’s shares edged slightly lower in early Monday trading. Nonetheless, the AI-chip giant is still on track to add over $350 billion in market value this month.

Nvidia (NVDA) surpassed Apple (AAPL) last week to become the world's most valuable company by market capitalization. It also replaced struggling chipmaker Intel (INTC) in the Dow Jones Industrial Average, with its stunning 2024 gains now exceeding 205%.

Nvidia is set to release its earnings report on Wednesday, November 20. Analysts are anticipating a massive 82% year-on-year revenue surge to just under $33 billion, driven by ongoing demand for its legacy Hopper chips and gains from its newly launched Blackwell processors.

In late August, Nvidia told investors that Q3 revenue would likely be around $32.5 billion, more than double the same period last year. However, the company has faced some delays in shipping its new Blackwell processors due to design changes and supply chain issues.

Nvidia’s dominance in the AI accelerator market—which powers the large datasets and language models used by companies like Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN), and Meta Platforms (META)—suggests it will guide investors toward substantial revenue gains over the coming year.

UBS analysts note that the four largest hyperscalers, all of which released Q3 earnings this week and drive the global AI investment race, are projected to spend $267 billion on capital projects related to new technologies next year, a 33.5% increase from this year’s forecast.

Demand for AI Chips Accelerates

Even Tesla (TSLA), with CEO Elon Musk’s ambitions for autonomous robotaxis and other self-driving electric vehicles, expects to invest around $11 billion this year, primarily in AI compute.

Piper Sandler analyst Harsh Kumar raised Nvidia’s price target to $175, projecting the AI accelerator market will grow by around $70 billion by 2025, with Nvidia expected to capture the majority share despite some supply constraints limiting short-term revenue gains.

Last week, Nvidia CEO Jensen Huang asked South Korea's SK Hynix to expedite deliveries of its high-bandwidth memory chips, which help AI systems run more efficiently and reduce power consumption, to meet the surge in demand.

AI Chip Supply Constraints

Morgan Stanley analyst Joseph Moore also believes that supply constraints will likely limit Nvidia’s ability to significantly raise its revenue forecasts. However, he still expects “several billion” in sales for Blackwell in the January quarter, along with modest growth for the Hopper line.

“We are back to being fully supply constrained on new products, which could limit the upside for the current quarter and outlook,” Moore said. He raised his target price for Nvidia by $10 to $160 per share in a report published Monday.

From my point of view, Nvidia’s future stock performance will largely hinge on demand for AI chips and effective supply chain management. With its leading position in the AI chip market and the continued growth in demand, Nvidia’s revenue growth is expected to remain strong. However, short-term revenue growth may be limited by bottlenecks in the supply chain. Nonetheless, Nvidia is actively working to address these supply issues, as evidenced by its collaboration with SK Hynix to expedite the supply of high-bandwidth memory chips, signaling the company’s confidence in future demand.

In my view, if Nvidia can gradually alleviate supply constraints and maintain its technological edge in the coming quarters, the stock is likely to trend upward and could see robust growth into 2025. Although short-term volatility may occur, the stock remains a compelling long-term investment opportunity given the rising global demand for AI accelerators. Therefore, I believe Nvidia’s stock is well-positioned to move higher, especially as supply chain challenges ease and new products are fully rolled out to the market.

Currently, Nvidia’s stock is trading at $145.26, with no resistance levels above this price.