Nvidia has experienced a remarkable resurgence in October, with its stock climbing nearly 25% since September and approaching its position as the world’s most valuable company. This dramatic turnaround comes after a challenging late summer period when even strong earnings couldn’t move investor sentiment.
The catalyst for this surge appears to be a confluence of positive developments in the generative AI ecosystem. Most significantly, OpenAI closed a massive $6.6 billion funding round that valued the company at $157 billion, led by Thrive Capital with participation from Microsoft, Nvidia, SoftBank, and Khosla Ventures. This funding represents the clearest signal yet that investors remain committed to generative AI, with most of these funds ultimately flowing to Nvidia through data center operators like Microsoft.
Nvidia’s next-generation Blackwell chips are now reaching customers, alleviating earlier concerns about manufacturing delays that had rattled markets in August. CEO Jensen Huang described demand for Blackwell as “insane” during a CNBC appearance, and key customers including Microsoft Azure and OpenAI confirmed receipt of their systems via social media posts. Microsoft Azure announced it was the first cloud provider running Blackwell, while OpenAI shared images of receiving one of the first DGX B200 engineering builds.
Taiwan Semiconductor Manufacturing Company (TSMC), Nvidia’s largest supplier, reported $23.5 billion in third-quarter revenue, exceeding analyst expectations. This monthly data provides frequent confirmation that GPU demand remains robust and suggests the AI computing boom is still in its early stages.
Perhaps most importantly, enterprise adoption is validating the technology’s value proposition. A Morgan Stanley survey of 400 companies across six industries found that 90% of organizations adopting generative AI reported the technology met or exceeded their expectations. The bank predicts that 2025 cloud capacity spending will reach $275 billion, equivalent to the entire Apollo space program budget.
Billionaire investor Vinod Khosla told Business Insider that while the AI space is overhyped, OpenAI specifically is not. Morgan Stanley analysts concluded that fears about Nvidia “are overdone,” noting the company’s position near the base of the AI supply chain makes it a primary beneficiary of continued data center expansion.
Key Quotes
The demand for Blackwell is ‘insane’
Nvidia CEO Jensen Huang made this statement on CNBC, emphasizing the extraordinary market appetite for the company’s next-generation AI chips. This comment helped reassure investors after earlier manufacturing delay concerns and contributed to the stock’s October rally.
Look what showed up at our doorstep. Thank you to Nvidia for delivering one of the first engineering builds of the DGX B200 to our office.
OpenAI’s team posted this message on social media, confirming receipt of Nvidia’s latest Blackwell-based systems. This public acknowledgment from one of AI’s most prominent companies validated that Nvidia is successfully delivering its next-generation technology despite earlier production challenges.
Companies that rent GPU capacity make back $5 for every $1 they spend.
Jensen Huang shared this ROI metric with David Solomon, attempting to quantify the economic value proposition of AI infrastructure. While investors have been skeptical of claims from Nvidia’s CEO, independent survey data showing 90% satisfaction rates among AI adopters is now lending credibility to such assertions.
Fears about Nvidia ‘are overdone’
Morgan Stanley analysts made this assessment in their research, arguing that Nvidia’s fundamental position near the base of the AI supply chain makes it a reliable beneficiary of continued industry growth. This view from a major financial institution helped validate the stock’s October surge.
Our Take
Nvidia’s October performance reveals how quickly sentiment can shift in the AI sector when concrete evidence emerges. The convergence of OpenAI’s funding success, Blackwell chip deliveries, TSMC’s strong results, and positive enterprise adoption data creates a compelling narrative that the AI infrastructure buildout is not only continuing but accelerating. What’s particularly significant is that this rally isn’t based on hype or promises—it’s grounded in actual product deliveries, customer confirmations, and survey data showing real business value. The Morgan Stanley comparison to Apollo program spending levels is striking and suggests we’re witnessing a generational technology transition. However, investors should note that Nvidia’s valuation remains highly dependent on sustained AI investment, and any slowdown in enterprise adoption or cloud provider spending could quickly reverse these gains. The key question remains whether the current $275 billion spending projection for 2025 represents sustainable growth or a peak that will eventually moderate.
Why This Matters
This story signals a critical inflection point for the AI industry and investor confidence in generative AI’s long-term viability. After months of skepticism about whether AI investments would generate real returns, multiple data points are converging to validate the technology’s business case. The OpenAI funding round demonstrates that sophisticated investors are doubling down on AI despite concerns about profitability timelines and executive turnover.
Nvidia’s position as the infrastructure backbone of the AI revolution makes its stock performance a bellwether for the entire sector. The company’s recovery suggests investors are recognizing that regardless of which AI applications succeed, the underlying compute infrastructure will remain essential. With 90% of surveyed companies reporting positive AI outcomes and cloud spending projected to reach historic levels, we’re seeing evidence that generative AI is transitioning from experimental technology to mission-critical business tool.
The successful delivery of Blackwell chips also addresses a key risk factor that had concerned investors about Nvidia’s ability to maintain its technological lead and meet surging demand. This development, combined with TSMC’s strong performance, indicates the AI supply chain is maturing and scaling effectively to support continued growth.
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Source: https://www.businessinsider.com/nvidia-stock-nears-all-time-high-after-openai-funding-2024-10