Nvidia CEO Jensen Huang Prepares for High Investor Expectations at Upcoming AI Conference

Nvidia Corp. is gearing up for its annual artificial intelligence conference, with high hopes that the semiconductor maker will announce news to keep its stock rally going. The “Nvidia GTC” event, known for its focus on graphics processing unit technology, has become a key global AI conference for developers. Taking place from March 18-21 in San Jose, California, CEO Jensen Huang is set to speak on the first day, with his remarks potentially helping to stabilize Nvidia’s stock after recent volatility and continue its impressive 80% surge this year.

“It’s a huge catalyst because they’re likely to provide more information, not just industry penetration,” said Ted Mortonson, technology services sector strategist at Robert W. Baird & Co. He compared the meeting to Apple Inc.’s annual product launch. .

Huang typically kicks off the event by introducing new products and outlining his latest vision of where technology is going. He is under pressure to introduce innovations that can replicate the wild success of the H100 chips in data centers and strengthen Nvidia’s leadership in this lucrative market.

This year’s look carries more weight after Nvidia’s 2024 earnings added $1 trillion to the company’s market value and made it the best-performing stock in the S&P 500. It’s been a bumpy ride for investors since March 7’s record close: On Tuesday, stocks hit their worst two-day drop in five months, but fell again on Wednesday. At the beginning of Thursday, the shares were down more than one percent.

Some of this volatility is likely due to investors positioning ahead of next week’s event. Options data shows that investors are paying increasing premiums for calls to benefit from rising prices as the meeting approaches, especially for short-dated contracts.

“It’s kind of like Apple’s product launches — everyone’s trying to get in front of it,” Mortonson said. “The million dollar question is, Will you sell news after Jensen’s keynote.”

The event is so important to stocks that Bank of America analysts led by Vivek Arya have dubbed it “AI Woodstock.” They have raised their price target on Nvidia to $1,100 from $925 before the conference.

While Nvidia’s valuation has nearly quadrupled over the past 12 months, that suggests there’s still room for additional earnings, according to BofA. The stock is now trading at a lower multiple than when ChatGPT launched in November 2022, Arya wrote.

And Wall Street is overwhelmingly bullish on Nvidia heading into the event. The company has 60 buy ratings, seven holds and zero sells among analysts tracked by Bloomberg.

“I feel very comfortable and confident about where the level of demand is and pretty much every estimate I’ve seen out there, probably including ours for the next 12 to 18 months,” TD Cowen analyst Matthew Ramsay said in an interview. He has an outperform rating and a $900 price target on Nvidia.

While expectations are positive leading up to the San Jose event, analysts and investors alike are aware that Nvidia shares are trading near technically overbought levels, which could trigger another pullback. Because of its size — it became one of the three largest stocks in the S&P 500 this year — sharp moves in any direction can swing the entire market.

Nvidia “is a name that has very high expectations, so they’re under pressure to continue to perform,” said Chris Carey, a portfolio manager at the Carnegie Investment Council. “If they don’t, it will be a surprise in the short term and then also an opportunity.”

Along with concerns that the hype surrounding Nvidia’s leadership in artificial intelligence will rub off on the stock, there’s also the possibility of more positive momentum depending on what happens from an event that has historically boosted the stock.

“There’s so much speculation and so much overhyped in this name that it’s not really trading at a valuation anymore,” Mortonson said. “It’s believing in a dream, so to speak, and the dream comes true.”