Nvidia's stock price has significantly rebounded this month, approaching its all-time high in June, becoming the second best-performing stock in the S&P 500 index. Today, the stock price rose by over 3% during trading, aiming for the $140 mark.

Nvidia's recent growth has mainly benefited from successfully allaying investors' concerns about product delays and long-term growth prospects. CEO Huang Renxun announced that the Blackwell chip has been fully put into production, with strong market demand. Morgan Stanley's report also supports this optimistic outlook, indicating orders are booked for the next 12 months, with business and prospects remaining strong.

Therefore, Nvidia's position as the preferred stock for AI investors has been further strengthened, especially against the backdrop of large companies like Microsoft increasing their investments in AI. It is understood that Microsoft is expected to increase its capital expenditure by nearly a third in the 2025 fiscal year, reaching approximately $58 billion.

Zehrid Osmani of Martin Curie Investment Management stated that concerns over production delays have eased. In addition, Taiwan Semiconductor's sales performance and OpenAI's overvalued financing also reflect the strong market demand for artificial intelligence.

John Belton, portfolio manager at Gabelli Funds, believes that the use cases of reasoning-based AI have reignited market interest, potentially bringing significant new product categories to Nvidia. Belton views Nvidia as a core holding and believes that AI will bring 'steady demand' in the coming years. 'It's not an undiscovered stock, but if it can achieve the expected numbers, the valuation is still reasonable.'

Data shows that analysts expect Nvidia's revenue to more than double in the current fiscal year and grow by another 44% in the next fiscal year. Wall Street continues to raise expectations for Nvidia's earnings and profits. This indicates that Nvidia's growth prospects are very strong, providing support for its stable valuation and enhancing investors' confidence to continue buying. Although the company's PE ratio is around 37 times, higher than the Nasdaq 100 index, it is lower compared to the five-year average level and the peak of over 44 times in June.

Osmani, portfolio manager of Martin Currie Investment Management, believes: "Nvidia still appears very strong, it is in a very favorable position to seize opportunities in the field of artificial intelligence."

Positive signs have also emerged in the options market. In Thursday's trading, there was a wave of buying frenzy, with over 30 million shares of stock bought at prices ranging from $150 to $189 per share, with these options expiring in March. Nvidia's stock closed at $134.80 in Friday's trading.

Furthermore, the cost of call options relative to put options (known as skew) has decreased, making the cost of betting on further stock price increases even more affordable for investors. These options contracts will expire after Nvidia's expected release of its fourth quarter earnings report at the end of February.

Dan Flax, Managing Director and Senior Research Analyst at Neuberger Berman, said: "Nvidia's stock price may continue to fluctuate, and the order situation may also be unstable. But if the company can successfully execute its product roadmap, this will drive healthy growth and maintain the attractiveness of the stock."

Editor/Lambor