This article was originally published on Forbes on Dec 23, 2024,05:03pm ESTForbes Forbes on Dec 23, 2024,05:03pm EST
Blackwell is the word for Nvidia as the AI leader heads into 2025, with multiple configurations and a mid-year upgrade (B300/GB300) for its new powerful GPU set to ramp significantly over the next few quarters. As recapped to the I/O Fund’s premium members after its Q3 earnings report, the I/O Fund is tracking multiple supply chain signals indicating Blackwell sales will likely far exceed the GPU sales we saw in 2023 and 2024 combined – to the tune of bringing Nvidia to $200 billion in data center revenue.
Analysts are already increasing their forecasts for Blackwell shipments for Q4 and for Q1, with forecasts for 250,000 to 300,000 shipments in Q4 nearly tripling to 750,000 to 800,000 in Q1. This compares to previous views seeing Q4 shipments of 150,000 to 200,000 ramping to 550,000 in Q1. This suggests Blackwell revenue estimates for Q1 are already moving 40-60% higher, potentially driving positive revenue revisions throughout the year as it becomes Nvidia’s primary GPU product.
Nvidia has tailwinds in 2025 from increased pricing power with Blackwell, output and shipment estimates already rising before the ramp begins, AI capex still quickly growing, and GPU clusters starting in the 100K range where Hopper maxed out, even as competition from AMD, Broadcom and others begins to increase.
Nvidia also has the benefit from the end of its fiscal year early next year, with the Street soon looking to 2026 numbers – which very well could be too low given the signals Blackwell is already giving. At the moment, Nvidia is trading at just 30x 2026’s estimated earnings of $4.43, its cheapest bottom line valuation since shares were $95 in May 2024 – and Blackwell still holds the potential to drive quarterly revenue beats the same way Hopper has and with margins returning to Hopper’s highs.
The bigger picture for Nvidia moving forward is that Blackwell holds the potential to dwarf Hopper, and the I/O plans on keeping its members informed on what it sees ahead for Nvidia with frequent updates for members. With that in mind, here’s what the I/O Fund sees as 2024 ends and 2025 begins.
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Nvidia Technicals: A Swing Higher In the Cards
Nvidia appears to be setting up for the next swing higher. As long as any further weakness holds over $116, this move should target between $165 – $173, with the potential to reach as high as $193.
If this swing gets confirmed, it would likely be the final 5th wave in the historic uptrend that started in October of 2022. This does not mean that the technicals do not support significantly higher prices, it only means that Nvidia will first have to deal with a notable correction in both price and time before it sees those levels.
The pattern off the October 2022 low developed as a classic 5 wave pattern. In early 2024 price went vertical. This was accompanied with max volume and peak momentum. This is the standard pattern seen in 3rd waves, and it tends to be the most powerful part of a 5 wave pattern. From the perspective of sentiment, this is the part of the trend where everyone realizes at once the direction of the trend. Shorts cover at the same time as the crowd buys, creating that standard pattern in 3rd waves.
This would mean that the correction in June of 2024 was the 4th wave, and that this is likely in the final 5th wave higher. The sentiment pattern in 5th waves to new highs in price, but on lower momentum and lower volume, which is what is happening now.
Nvidia appears to be setting up for the next swing higher. Source: I/O Fund
Zooming into the 4th wave correction that started in June of 2024 offers a better idea of the two potential paths that I am currently tracking.
Zooming into the 4th wave correction that started in June of 2024 gives a better idea of the two potential paths that I am currently tracking. Source: I/O Fund
- Blue – The final 5th wave is playing out as an ending diagonal pattern, which is common for 5th waves. This type of pattern is a 5 wave pattern in itself that is characterized with large swings in both directions. Our target zone for the bottom on this 4th wave is $126 – $116. If Nvidia can push over $140.75, then then odds favor this scenario.
- Red – Nvidia is in a much more complex 4th wave. If this is playing out, NVDA would see the $116 level break, which opens the door to a potential low at $101, $90, or $78.
One final point worth mentioning is how the broad semiconductor sector is performing in relation to the S&P 500. Semiconductors tend to be much more sensitive to the consumer, and economy than most sectors. For this reason, in periods of economic expansion, semiconductors tend to lead, outperforming the broad market.
However, when this sector starts to move against the broad market, it tends to be a warning that volatility is ahead. In fact, every time that the semiconductor sector has made a lower high while the broad market made a higher high – i.e., semiconductors do not confirm the move higher – this preceded some period of volatility since the 2021 top.
When semiconductors start to move against the broad market, it tends to be a warning that volatility is ahead. Source: I/O Fund
This pattern can be seen going back to 2000 and consistently warned of weakness. As of now, this is one of the largest and longest periods of divergence between the semiconductor sector and the broad market on record.
If the broader semiconductor sector stays below its July 2024 high, I would consider this a warning. This does not mean that I do not see potential upside, it only means that any long positions the I/O Fund takes will have strict targets at which we take gains and stops to protect us in case the market turns against us.
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Conclusion
Make no mistake, Nvidia is the best stock of the decade and it’s only four years in. The I/O Fund has an aggressive buy plan at key levels should the stock pull back, and we have a backup plan should the stock overcome the peer pressure we are seeing from the semiconductor industry and meaningfully breakout.
Nvidia has been our largest position for the last 4 years. The I/O Fund sent out nine buy alerts to our readers to buy this position below $20 in 2021 – 2022. The I/O Fund believes the future is bright for Nvidia, and believe the potential next swing is worth playing. However, with all the warning signs, any new long position will have strict risk controls until these warnings reset.
The I/O Fund is also closely analyzing the supply chain to identify overlooked beneficiaries of the AI infrastructure buildout, sharing this information as well as potential buy and sell plans and real time trade alerts with premium members. The I/O Fund recently entered two separate beneficiaries for gains of 23% and 17% since November. Learn more here.
I/O Fund Portfolio Manager Knox Ridley and I/O Fund Equity Analyst Damien Robbins contributed to this report.
Please note: The I/O Fund conducts research and draws conclusions for the company’s portfolio. We then share that information with our readers and offer real-time trade notifications. This is not a guarantee of a stock’s performance and it is not financial advice. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis. Beth Kindig and the I/O Fund own shares in NVDA at the time of writing and may own stocks pictured in the charts.
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