Nvidia's Open-Source AI Push Seen as Key to Next Valuation Re-Rating

Nvidia's stock has been on a six-session losing streak since 2022, despite strong fundamentals and bullish analyst sentiment.

HSBC analyst Frank Lee believes that Nvidia's next major valuation re-rating will come from its positioning as the world's largest contributor to open-source AI.

This is because open-source models are now the second most popular category by token generation, according to Nvidia's own figures.

The shift matters because it presents significant earnings upside for Nvidia, with small language models lowering the barrier to entry for enterprise inference and expanding the total addressable market beyond just a few frontier labs.