Nvidia Stock Has Avoided the Worst of the AI Selloff. It Will Try to Rise Again Today.

Nvidia chips are the favored choice for training artificial-intelligence models. (Akio Kon/Bloomberg)

Key Points

About This Summary

• Nvidia stock increased 0.4% to $178.37 in early trading, following a 0.4% rise on Thursday.
• Analysts acknowledge circular deals but note that demand for Nvidia chips appears nearly insatiable due to AI’s widespread adoption.
• A U.S. Census Bureau survey indicates a steady improvement in AI adoption across over one million firms.

Nvidia stock was edging higher early Friday even as doubts about the momentum behind the artificial-intelligence stock rally lingered.

Nvidia stock was up 0.4% at $178.37 in early trading. The stock rose 0.4% on Thursday.

Questions continue to swirl around how apparently circular deals such as Nvidia’s up-to $100 billion investment in OpenAI—much of which is likely to be returned to Nvidia in the form of chip purchases—can sustain the AI boom.

“While the circular accusation is true to a large extent, currently the demand for Nvidia chips seems nearly insatiable,” wrote Dave Novosal, an analyst at credit-research firm Gimme Credit, in a research note on Friday.

“Firstly, Nvidia is the clear leader among chip providers, at least for the time being. Secondly, we expect robust demand for AI for the foreseeable future. AI is being employed by virtually every major company. And firms are finding more and more uses for AI in their operations, primarily because of the massive cost savings attained.”

Wall Street is generally positive on the prospect of continued AI spending from a wider range of companies.

“The latest U.S. Census Bureau survey tracking AI adoption across more than a million firms in the U.S. showed a steady sequential improvement in the AI adoption rate, and we think the industry is poised to enter the next phase of growth where penetration accelerates,” wrote Mark Haefele, chief investment officer of Global Wealth Management at UBS, in a research note.

Among other chip makers, Advanced Micro Devices stock was up 0.4% and Broadcom was rising 0.4% in morning trading.

Write to Adam Clark at adam.clark@barrons.com