On Wednesday, the "AI leader"$NVIDIA (NVDA.US)$once again single-handedly saved the US stock market from dire straits - CEO Huang Renxun's comments on the "huge demand for AI chips" causing strained relations with NVIDIA's customers sparked a rally in the major stock indices, with the technology and chip sectors leading the way, achieving a smooth V-shaped rebound and rise, $PHLX Semiconductor Index (.SOX.US)$ finishing the session with a strong close, up nearly 5%.
Looking at the global markets, NVIDIA's influence extends far beyond this, and the recently sluggish Asia-Pacific markets have also followed NVIDIA's strong rebound. Among them,$Nikkei 225 (.N225.JP)$the index surged more than 3.5% at one point, closing up 3.4%. $Tokyo Electron Device (2760.JP)$ Rose nearly 5% at one point,$Advantest (6857.JP)$Rose 9% at one point. Taiwan Weighted Index closed up 3%, Taiwan Semiconductor's stock rose 4.79%, and Hon Hai Precision rose 4.72%.
Can Nvidia save the US stock market? These AI stocks are more resistant to decline than Nvidia!
Although the recent stock price has been volatile, Nvidia has often surprised people with its strong resilience in the midst of the storm. At the same time, the market continues to focus on the AI smart industry and related concept stocks. After experiencing the 'Black Monday' in early August, many stocks have rebounded strongly, showing extremely stable performance. Some stocks even demonstrate significantly better resilience and rebound strength than Nvidia.
Futubull data shows that the stocks just announced to be included in the S&P 500 index last week$Palantir (PLTR.US)$Performance is particularly outstanding, with a rise of over 40% since 'Black Monday', and the current stock price has fallen less than 1% from its recent high; the cumulative increase this year has exceeded 50%. $Oracle (ORCL.US)$ It has become the second biggest winner after Nvidia, despite experiencing 'Black Monday' on August 5th and the 'Black Opening' on the first trading day of September 3rd. Oracle has still gained more than 18% in the past month, outperforming Nvidia. $IBM Corp (IBM.US)$ The 'Blue Giant' is also quietly making a comeback, with a significant rise of over 20% this year, and still showing a strong increase of over 12% in the recent two rounds of major corrections.
In addition, semiconductor stocks $Arm Holdings (ARM.US)$ Nvidia. $Taiwan Semiconductor (TSM.US)$ , cloud computing service provider $ServiceNow (NOW.US)$ , software company $Adobe (ADBE.US)$ , as well as the "Big Seven" $Amazon (AMZN.US)$Please use your Futubull account to access the feature.$Tesla (TSLA.US)$ Similarly, it performs excellently.
A number of AI concept stocks are showing a flourishing and vibrant optimistic situation. Huang Renxun also stated that, although generative AI is still in its early stages, it will expand beyond data centers. "What is amazing now is that the first trillion-dollar-scale data center market will happen no matter what, propelled by the development of chips." He said, "Generative artificial intelligence is not just a tool, but a skill, and we will create skills that enhance human capabilities for the first time."
What is the outlook for the AI industry? Which targets are still worth watching?
Since the end of summer this year, the "AI belief" in the US stock market has faced multiple challenges. The dismal financial performance of large tech companies contrasts sharply with the massive capital expenditure on AI and the lackluster growth of core businesses, quickly raising questions about the rationality of high valuations of AI concept stocks. Market sentiment continues to be dominated by concerns about the uncertainty of AI monetization, slowing demand for AI, and the possibility of an AI bubble bursting.
These concerns quickly spread to the upstream AI industry chain. Investors are concerned that if customers of chip companies like Nvidia cannot generate matching revenue from AI, or if they are affected by economic slowdown, the huge investment by giants in GPUs and other AI hardware may not be sustainable. The delayed release of the Blackwell chip dealt a heavy blow to Nvidia's stock price, which fell by over 13% since the release of its second-quarter financial report. Bank of America analysts pointed out that the details of Blackwell's readiness for shipment are a key catalyst for Nvidia's stock price recovery.
At this critical moment, Huang Renxun's statement undoubtedly "cools down" the anxious market sentiment in a timely manner. Regarding chip demand, Huang Renxun stated that the limited supply of popular chip products has frustrated some customers, leading to tension in relationships. He said, "Demand is too strong, everyone wants to be in the first batch, everyone wants to order the most, our customers are more excited, which is expected, and it is indeed very tense, we are trying our best." During this time, he also said, "Our company cooperates with every AI company in the world, and everyone relies on us."
At this meeting, Huang Renxun also pointed out that cloud service providers utilize Nvidia's accelerated computing technology to deploy infrastructure in the cloud, enabling developers to use these high-performance machines for model training, tuning, and safeguarding, thereby achieving amazing return on investment. Huang Renxun further explained that every $1 investment in Nvidia technology by cloud service providers can generate a return of $5.
Huang Renxun's speech undoubtedly gave the industry a shot in the arm, and the market is still full of expectations for AI. Goldman Sachs' senior technology stock analyst Kash Rangan pointed out that in order to rejuvenate the dominance of large-cap tech stocks and push them to new heights, two factors need to work together: steady interest rate cuts by the Fed, combined with "explosive" innovation that drives corporate profit growth of more than 20%. The technology industry must rely on advances in the field of artificial intelligence AI, such as increasing customer sales and achieving profits.
In terms of specific stock investment opportunities, Morgan Stanley believes there may be certain layout opportunities for edge AI, recently.$Arm Holdings (ARM.US)$has listed Arm as its new preferred large-cap stock, citing the recovery of the mobile market, new opportunities in edge AI, and the resulting royalty growth. The bank maintains its "shareholding" rating and a target price of $175.
Edge AI refers to running AI algorithms directly on user devices, such as on smartphones, laptops, or wearable devices.
Analysts believe Arm is a crucial part of the transition to edge AI. The growth of Arm's royalties is driven by the mobile market (compound annual growth rate of 35% from fiscal year 2024-27), strong momentum in the mid-term for the automotive business, and steady growth in the infrastructure sector. Analysts expect the increasing use of the v9 architecture, coupled with the shift towards more custom chip work, to be a characteristic of mobile business growth.
Simpson and his team also point out that the release of the iPhone 16 indicates that the device is using the Arm-based A-series processor (A18). They believe this could be a core based on Arm v9, potentially utilizing CPU extensions and achieving greater resource balance between the CPU, NPU, and GPU.
Morningstar's preferred stocks include $Taiwan Semiconductor (TSM.US)$ And describes Taiwan Semiconductor as a "major" beneficiary of AI because both cloud AI and edge AI rely on Taiwan Semiconductor, making it "immune" to changes in both. In addition, Morningstar believes that although Taiwan Semiconductor and Samsung have performed well in the past year, they are still undervalued because their "large scale" influence in the AI and other advanced semiconductor fields brings further potential for returns.
With its recent outstanding stock performance, $IBM Corp (IBM.US)$ seems to be a robust technology stock betting on the AI boom. Pagliara from Capwealth said that IBM's stable predictability is very suitable for long-term investors with a 15 to 20-year investment horizon or those who want to earn dividend income. Brian Mulberry, portfolio manager for Zacks Investment Management Inc., also agrees. He said,
If you want to maintain a balanced exposure to the technology sector and turn to higher quality and more stable balance sheets, then I would definitely sell Nvidia today and buy IBM.
Mooers, do you think the AI industry still has room for growth?
Which AI stock do you think will perform well in the future?
Let's discuss in the comments section!