On Wednesday, September 11th, during the midday session of the U.S. stock market, CEO Huang Renxun's discussion with Goldman Sachs CEO Solomon at a technology conference organized by Goldman Sachs triggered a surge in the U.S. stock market. His comments on the "huge demand for AI chips" causing "tension between Nvidia and its customers" completely erased the intraday decline and led to a V-shaped rebound and rise in major stock indexes, with technology and chip stocks leading the way. $NVIDIA (NVDA.US)$ On Wednesday, September 11th, during the midday session of the U.S. stock market, CEO Huang Renxun's discussion with Goldman Sachs CEO Solomon at a technology conference organized by Goldman Sachs triggered a surge in the U.S. stock market. His comments on the "huge demand for AI chips" causing "tension between Nvidia and its customers" completely erased the intraday decline and led to a V-shaped rebound and rise in major stock indexes, with technology and chip stocks leading the way.

In the early trading session in the US stock market, Nvidia briefly dipped slightly below $107, but with Huang Renxun's speech, the increase continued to expand. By the close, it continued to hit new daily highs, peaking at an 8.4% increase and briefly breaking through $117. Nvidia rose 8%, marking the largest increase in six weeks, and has risen for three consecutive days, recovering most of the decline since August 30th.

With Nvidia's strong performance serving as a 'straw to save the market', the S&P 500 index rebounded from an initial 1.6% decline to a rise of over 1%, while the Dow Jones Industrial Average rallied from an initial drop of nearly 744 points or 1.8% to a 0.3% gain, and returned above the 400,000-point psychological barrier. The Nasdaq rebounded from a 1.4% drop to a rise of over 2%, with an intraday swing of over 630 points or 3.8%. The Russell 2000 small-cap index turned from a 1.8% decline to a 0.3% rise, the Nasdaq 100 went from a 1.6% decline to a 2.2% rise, and the Philadelphia Semiconductor Index went from a 1.4% decline to a nearly 5% surge.

Some analysts pointed out that this is the first time since October 2022, almost two years ago, that the S&P 500 index and the Nasdaq 100 index completely eliminated intraday declines of at least 1.5%. In other words, Nvidia and Jensen Huang, single-handedly, managed to overcome the entire impact of the significant inflation data from the U.S. CPI for August 8th, which happened earlier in the day.

Zerohedge, the financial blog known for its sharp tongue, said that after the US stock market collectively fell more than 1% and fell to last Friday's low after the non-farm payroll data, it was once again saved by a phrase from Huang Renxun, "Regardless, all the market hears is 'strong demand' four words."

Wall Street Journal mentioned in summarizing Huang Renxun's speech on Wednesday that the most impressive sentence he said was, "AI chip Blackwell is so popular that it has made customers dissatisfied, and Nvidia's products have become the most sought-after commodity in the tech world, with customers competing for limited supply:"

"Everyone is counting on us... the demand for our products is so high that everyone wants to be the first to get them and get the most share. Today we may have more emotional customers, which is understandable. The relationship is very tense, but we are doing our best."

He also mentioned:

"We have a lot of responsibilities, and everyone is counting on us. The demand is so high that the delivery of our components, technology, infrastructure, and software is truly an exciting/emotional thing for people. Because it directly affects their income, directly affects their competitiveness. You know, this situation is happening all over the world, everything is sold out. Therefore, this demand is simply incredible."

After last week's sharp decline, Huang Renxun's speech was seen as an opportunity to calm investors' nerves and answer the big question about "AI demand."

According to analysts, following last week's plunge of about 14% and a market capitalization evaporating by $400 billion, Huang Renxun's keynote speech was seen as an opportunity to calm investors' nerves. Despite recent selling, Nvidia's stock price has still risen nearly 150% over the past 12 months.

Over the past two weeks, Nvidia's stock price has fallen by 20%, mainly due to concerns that the artificial intelligence investment frenzy that has driven the market up since the launch of ChatGPT in November 2022 may soon start to fade.

On the one hand, many people worry that the economic slowdown will prevent the continued rapid growth of artificial intelligence demand. At the same time, investors in Nvidia products face a major question: can AI generate enough revenue to justify the massive investment in GPUs and other AI hardware?

Therefore, Huang Renxun's latest speech "answering investors' major question" is the key factor that drives Nvidia and the US stock market index to turn around. Huang Renxun also informed the audience that generative AI is still in its early stages, and it will expand to more areas outside of data centers, igniting imagination for future growth.

"Barron's" reported that the strong financial report of software giant Oracle this week reminds people that the demand for Nvidia's AI-related chips is expected to remain strong. This trend was confirmed by Huang Renxun today. In addition, startups like xAI under Musk's company are using a large number of Nvidia GPUs to build their Colossus AI training infrastructure. Meta has long planned to purchase billions of dollars worth of Nvidia H1 chips by the end of this year. These large tech customers with expansion plans are enough to make Nvidia dominate the AI chip market.

The views of mainstream investment banks vary recently, Goldman Sachs remains bullish, Barclays calls for calm, and Citigroup says Nvidia is no longer the top pick for AI.

Goldman Sachs' well-known analyst Toshiya Hari still maintains a "buy" rating for Nvidia this week, and the Goldman Sachs team believes that Nvidia's stock was oversold last week. The reason cited is that "demand has remained strong":

"First, the demand for accelerated computing remains very strong. We have always focused on the AI chip demand of super-large-scale cloud providers like Amazon, Google, and Microsoft, but you will see that the demand is expanding to other companies and even sovereign nations."

(Note: Hyperscaler mainly refers to cloud computing platform service providers with multiple data centers and hundreds of thousands or even millions of servers, also translated as "super-large-scale operators".)

Goldman Sachs believes that the sell-off of Nvidia began with the company's favorable financial report released on August 28, which did not meet Wall Street's extremely high expectations. For example, revenue exceeded expectations by nearly 4.1 percentage points, the smallest proportion since the fourth quarter of the 2023 fiscal year. The biggest debate surrounding Nvidia at the moment is whether its profitability momentum can continue in 2025 or even 2026:

Since the beginning of 2023, investors' attitude towards AI has undergone a nearly 180-degree transformation. Investors' patience is running out, they want to see - not be told - the increase in AI-driven revenue sources and profit margins.

But with profound intergenerational technological changes such as AI, making judgments based on short-term costs and returns is futile. The focus is on long-term goals. Goldman Sachs estimates that from the second half of 2025, generative AI will begin to make a substantial contribution to industry growth.

Therefore, Goldman Sachs believes that Nvidia's competitive position remains very strong. We do believe that in the commercial silicon field, Nvidia is the first choice, even compared to customized (self-developed) silicon, they also have an advantage in innovation speed.

But Citi's U.S. stock strategist Scott Chronert warned last week at the Nvidia sell-off that Nvidia may be turning into a no longer exciting, regular large-cap growth stock:

"Simply looking at the deceleration of performance forecast growth rate reveals that its most profound performance and fundamental impact on the market trend may have passed."

The investment bank's view is that the expectation of the Fed's imminent rate cut accelerated the withdrawal of funds from the once dominant technology leaders, and while still predicting Nvidia's profit growth to remain strong, Nvidia will no longer continue to be a huge driver of S&P large-cap returns in the future. Its 'profit steady but not outstanding' financial report resulted in selling, indicating that the position of this semiconductor giant as the main AI darling in the market is declining, and in contrast, Apple has replaced Nvidia as the preferred AI stock for Citi's U.S. stock team.

In addition, Barclays analysts had also stated in June that based on their preliminary estimates, the AI capital expenditures of super-large-scale cloud suppliers by 2026 are probably sufficient to support existing internet plus-related and 12,000 new AI products similar to ChatGPT in scale:

"But will this happen? Silicon Valley is fervently discussing how AI will change the world, and we do expect many new services to reveal some bullish cases, but probably not need to have as many as 0.012 million."

Editor/Somer