(Bloomberg) — Shares of Nvidia Corp. (NVDA) is roaring back after the company successfully addressed investor concerns about product delays and its long-term growth prospects.

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The stock is up 13% so far this month and is on track for its first record high since June, although still below an intraday peak. It is the second-best performer in the S&P 500 Index this year.

Recent momentum came after CEO Jensen Huang said Nvidia’s Blackwell chip is “in full production” and demand for it is “insane,” comments that came after Blackwell was postponed due to technical issues, leading to a selloff that has now been erased. In addition, a report last week from Morgan Stanley analysts who met with management said Blackwell orders are “fully booked for approximately 12 months,” with “all indications that the business remains robust with a very high future outlook.”

Shares rose 2.2% on Monday.

The comments reinforce the view that Nvidia is still a favored way to invest in artificial intelligence, especially as major companies remain committed to their AI initiatives. Microsoft Corp (MSFT), for example, is expected to increase capital expenditures by nearly a third in fiscal 2025 to about $58 billion, according to Bloomberg’s average of analyst estimates.

“There were questions about the impact that production delays could have, so these updates are reassuring,” said Zehrid Osmani, portfolio manager at Martin Currie Investment Management.

Adding to the Blackwell optimism, recent sales of Taiwan Semiconductor Manufacturing Co. strong demand for AI, while a funding round for OpenAI resulted in a $157 billion valuation. OpenAI recently released an AI model with reasoning capabilities, something Alphabet Inc. also working on.

These events “have reinvigorated interest in this space, and people are getting really excited about the use cases of reasoning-based AI,” says John Belton, portfolio manager at Gabelli Funds. “Reasoning represents a new area for Nvidia, and considering how compute-intensive it is, this could be a huge new product category.”

Belton views Nvidia as a core holding company and sees AI providing “steady demand for demand” for years to come. “It’s not an undiscovered stock, but the valuation is still reasonable if it can deliver the expected numbers.”

The story continues

Analysts expect Nvidia’s revenue to more than double in the current fiscal year and rise another 44% in the next fiscal year, according to data compiled by Bloomberg. The Street has consistently raised estimates for Nvidia’s revenue and earnings over the past quarter.

Nvidia’s strong growth prospects have kept its valuation in check, supporting bulls’ stance to continue buying. The price is valued at about 37.5 times estimated earnings, which represents a premium to the Nasdaq 100 Index, but it is below the five-year average and below the June peak of more than 44 times.

“Nvidia still looks formidable,” Osmani says of Martin Currie. “It remains really well positioned to capitalize on the AI ​​opportunities.”

There are also signs of optimism in the options market. Thursday saw a flurry of buying through calls that allowed holders to buy more than 30 million shares at levels ranging from $150 to $189 through March. Nvidia closed at $134.80 on Friday.

The cost of calls versus bearish put options – also known as the skew – has fallen, making it cheaper to bet on a further rally. The contracts will not expire until Nvidia’s fourth-quarter results are published, which is expected at the end of February.

“Stocks will remain volatile and orders will be lumpy,” said Dan Flax, managing director and senior research analyst at Neuberger Berman. “But as long as Nvidia executes on its product roadmap, it will drive the kind of healthy growth that keeps the stock attractive.”

Technical chart of the day

The shares of Tesla Inc. fell 8.8% on Friday in the wake of the Robotaxi event, with the stock falling nearly a key technical level. Shares closed only slightly above their 100-day moving average, a level they have been above since June. Breaking below that would be a negative sign for medium-term momentum trends.

Top tech stories

• Taiwan Semiconductor Manufacturing Co. is planning more factories in Europe with a focus on the artificial intelligence chip market, a senior Taiwanese official said, as the chipmaker expands its global footprint.

• TPG Telecom Ltd. agreed to sell its fiber assets and the company’s fixed businesses for enterprise, government and wholesale customers to Vocus Group Ltd. in a deal worth A$5.25 billion ($3.5 billion).

• South Korea’s exports of technology products slowed for a second month in a row, an indication that global demand may be peaking, according to government data that also showed memory chip shipments and prices lost momentum.

• Apple Inc. is finally preparing to compete for the smart home market after falling behind Amazon and Google. Apple has been selling the devices for our pockets, wrists, backpacks and desks for years. But it has struggled to achieve that kind of success in other key areas: the car, the face and the home.

—With help from David Marino.

(Updates to open the market.)

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