Nvidia's AI Chip Demand Keeps Outpacing Supply

Nvidia's stock price has been holding steady at around $225 after a slight dip of 1% last week, according to TIKR.com.

The company's August Q2 report showed a 106% revenue jump to $96.2 billion, with Data Center sales rising 117% to $89.0 billion. Management guided Q3 revenue to $108 billion, plus or minus 2%, and CFO Colette Kress noted that supply will remain a bottleneck through the end of fiscal year 2028.

The key factor driving Nvidia's growth is the increasing demand for AI chips, with customers wanting more chips than Nvidia can build. Deals this month reinforced this trend, including Amazon Web Services' plan to deploy 2 million additional Nvidia GPUs and Nvidia's $1.5 billion commitment to power developer SB Energy.

A valuation model predicts a target price of $595, implying 164.6% total upside from the current share price and a 51.2% annualized return over the next 2.3 years. This assumes revenue will continue to compound at 60.5% a year, slightly below the 65.5% pace of the past 12 months.