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Shares of Nvidia (NASDAQ: NVDA) rose higher on Tuesday, rising as much as 6.2%. As of 1:33 PM ET, the stock was still up 5.7%.
The catalyst that the chipmaker sent and artificial intelligence (AI) Specialist higher were reports that delays from the Blackwell AI processor are unlikely to be as bad as initially feared.
Billions are at stake
Earlier this month, reports presented that Nvidia’s highly anticipated Blackwell B200 AI processor, set to hit the market later this year, would ship as much as three months late, thanks to a design flaw, according to a report that first appeared on the website The Information.
With billions of dollars in potential sales of the next-generation AI processor at stake, investors were right to be concerned, sending shares tumbling in the wake of the report.
However, things may not be so bad. Analysts at UBS have investigated the matter and claim that shipments of the Blackwell chips have been delayed by “perhaps four to six weeks at most, putting them at the very end of January 2025.” Demand remains strong and will likely be filled by Nvidia’s H200 processor during the shorter delay, the analyst wrote in a note to clients. UBS further suggested that both research labs and corporate clients continue to invest heavily in AI, “both bullish indicators.”
A long road ahead
It’s important for Nvidia investors to keep in mind that the company’s growth — especially when it comes to AI — will come in fits and starts. Furthermore, a look at Nvidia’s stock chart reveals an important lesson. While the stock is up 24,000% over the past decade, there have been numerous 50% declines or more.
Investors who are able to withstand the sometimes heartbreaking volatility that comes with owning these fast-growing stocks are richly rewarded. Moreover, one must ignore the daily machinations of the stock market to reap those rewards.
Nvidia may seem expensive at 42 times forward earnings, but I’d say it’s a fair price to pay for a company that’s generating triple-digit growth and is in pole position in the AI revolution.
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Danny Vena holds positions at Nvidia. The Motley Fool holds positions in and recommends Nvidia. The Motley Fool has one disclosure policy.
Why Nvidia Stock Soared Tuesday was originally published by The Motley Fool