Why Nvidia Stock’s May Surge Was Just the Tip of the AI Iceberg

Short sellers hoped that the market’s enthusiasm for Nvidia’s (NASDAQ:NVDA) AI chips would have subsided by now. Despite this, Nvidia keeps selling chips and generating revenue. Nvidia stock had a remarkable surge in May, undoubtedly deserving an “A” grade.

Nvidia reported Street-beating financial results in May along with a stock split and a dividend increase. It’s hard to find major red flags with Nvidia because of its many green flags. Nvidia is expected to provide shareholder value this summer, so let the trend be your friend.

Guess Who Plans to Order 100,000 Nvidia GPUs?

You probably know Elon Musk as the CEO of Tesla (NASDAQ:TSLA). However, Musk also has a generative-AI startup known as xAI, which is intended to compete with ChatGPT developer OpenAI.

Reportedly, Musk and xAI plan to use some of the proceeds from a $6 billion round of financing to buy 100,000 of Nvidia’s H100 graphics processing units. Furthermore, xAI will use the GPUs to build a supercomputer.

If it’s estimated that each H100 GPU could cost $40,000, then the total 100,000-GPU purchase order may be valued at a whopping $4 billion. Yet, there are implications beyond a Musk-Nvidia partnership.

Perhaps, Nvidia could become the go-to hardware provider for America’s best-in-class supercomputers. This would provide another powerful revenue stream for Nvidia, which already demonstrated robust revenue growth in the company’s most recent quarterly report.

More Evidence of Demand for Nvidia’s AI Chips

Here’s yet another green flag for Nvidia, in case anybody really needs one at this point. Personal computer manufacturer Dell Technologies (NYSE:DELL) recently reported its quarterly earnings.

Amazingly, Dell’s shipments of AI-optimized servers increased by over 100% quarter-over-quarter to $1.7 billion.

Dell’s backlog of orders for AI servers grew 30% QoQ to $3.8 billion. Overall, Dell observed a strong demand for AI-enabled servers, and especially for ones that include Nvidia’s chips.

Dell Technologies Chief Operating Officer Jeffrey Clarke explained, “When you look at the composition of our [AI server] backlog, it’s primarily Nvidia-based.” Clarke added, “It’s continuing to build every quarter. Our five-quarter pipeline continues to grow.”

Dell is just another example of a company that relies on Nvidia’s best-in-class, AI-compatible components. For investors, this is a green flag that they can add to their growing collection of green flags for Nvidia.

Looking Forward to June and July With Nvidia Stock

Pardon the pun, but May was “a-May-zing” for Nvidia’s loyal shareholders. So, how will June and July shape up, and will the bull run continue throughout 2024?

No guarantees can be made, of course. However, the green flags vastly outnumber the red flags, if there are any red flags at all for Nvidia. Therefore, we’re looking forward to a stellar summer and we’re gladly assigning an “A” grade to Nvidia stock.

On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.