Nvidia Stock Eyes Record as TSMC Sales Jump on AI Demand

Nvidia stock has lost momentum this week, just as it was about to hit its all-time high. It has dropped in the last three consecutive days, reaching a low of $223, down by 4.68% from the highest point this month. Still, the stock faces some major catalysts, including the new reporting by Taiwan Semiconductor (TSMC), which showed that its August revenue soared.

TSMC, Nvidia’s Main Supplier, Published Strong Numbers

Taiwan Semiconductor, the biggest supplier to Nvidia, is seeing strong demand, a sign that the artificial intelligence boom is not ending. In a statement today, the company said that its August revenue jumped by 53% in August from the same month’s last year. It rose by 10% from the previous month.

It posted revenues of $514 billion New Taiwan Dollars ($32 billion) during the month, continuing a trend seen over the past few months. Its monthly revenue has spiked in the last four consecutive months.

Its recent results showed that its second-quarter revenue rose by 77%, with the third-quarter revenue expected to be between $44.6 billion and $45 billion. These numbers show how demand for the company’s products and services is rising.

TSMC has many clients, including companies like Nvidia, Apple, Broadcom, AMD, MediaTek, and Qualcomm. Its results, which normally come out monthly, act as a barometer for Nvidia, its biggest client.

Nvidia to Benefit From Anthropic IPO and OpenAI Astra

In addition to TSMC earnings, Nvidia stock is set to benefit from the upcoming Anthropic IPO, which is expected to launch either this month or in October. Anthropic has already selected bankers and is expected to publish its prospectus soon. After this, it will move to a roadshow and then go public at a $2 trillion valuation.

Anthropic’s IPO is important for Nvidia because of its large investment in the company. This investment will pay off eventually, leading to a big boost in its unrealized profits.

Also, Anthropic is expected to raise billions of dollars from investors when it goes public. Some of these funds will be used to fund its AI ambitions, with some of it going to Nvidia. Anthropic already has a $35 billion deal with Nvidia.

Meanwhile, there are signs that OpenAI is regaining momentum after several months of slowdown. This growth is being fueled by Astra, its new model that it believes is at par with Anthropic’s Fable.

Nvidia’s revenue growth is expected to keep rising in the near term. Its last results showed that its revenue more than doubled in the second quarter to over $96 billion, and the company sees the third-quarter figure growing by 91% to $108 billion. The real revenue will likely be higher as the recent TSMC earnings showed. Also, Nvidia has a long record of doing better than estimates.

All this is happening at a time when the company is trading at bargain prices. By adding its forward revenue growth estimate and profit margin, we see that its Rule-of-40 figure exceeds 130%. It also trades with a forward price-to-earnings ratio of less than 25.

Nvidia Stock Price Technical Analysis

The daily chart shows that the NVDA stock price has jumped in the past few months. It peaked at $230, a few points below the all-time high of $236. The stock has remained above the 50-day EMA. And, most importantly, it is forming a cup-and-handle pattern.

Therefore, the stock will likely resume the upward trend and retest the all-time high of $236. Moving above that level will point to more gains in the coming months.