Nvidia Corp. is on track to potentially hit a new all-time high as investment in artificial intelligence (AI) infrastructure continues to escalate, according to Wall Street analysts. The chipmaker’s upcoming earnings report is expected to provide further insight into AI demand, which remains robust despite broader economic uncertainties.
Amid ongoing debates about Federal Reserve policies, the state of the economy, and the upcoming US presidential race, AI investment is emerging as a clear priority. Companies across the tech sector are investing billions into AI technologies, positioning Nvidia as a primary beneficiary. Erik Swords, lead portfolio manager at Voya Investment Management, emphasized that the AI infrastructure build-out is far from complete, indicating significant growth potential for Nvidia and other AI hardware providers. “We’re nowhere near close to finishing the build-out of AI infrastructure, and that gives you a very good line of sight in terms of the growth you can expect over the coming years,” Swords remarked.
Despite recent market volatility and a tech selloff triggered by concerns over the returns from AI investments, Nvidia’s stock has been a standout performer. The company’s shares are up nearly 30% since August, approaching their previous all-time high. This resurgence is part of a broader rebound in AI hardware and chip stocks, which includes notable performers like Micron Technology, Marvell Technology, Super Micro Computer, Broadcom, Advanced Micro Devices, and ARM Holdings.
Tech giants such as Microsoft, Amazon, Alphabet, and Meta Platforms—major customers of Nvidia—have reaffirmed their commitment to AI spending, contributing to the bullish outlook. Their substantial investments underscore a strategic priority to stay ahead in AI development, even amidst economic uncertainties. Bryant VanCronkhite, senior portfolio manager at Allspring Global Investments, highlighted that these tech giants have virtually unlimited resources for AI spending, making their commitment a strong signal of sustained investment.
The AI infrastructure investment is projected to be massive and long-lasting. Needham forecasts that spending on data center infrastructure for generative AI could reach $6 trillion. UBS Global Wealth Management’s Solita Marcelli predicts a potential 25% increase in capital expenditure from big tech companies by 2025, surpassing current consensus expectations of 10-15% growth.
While AI spending has yet to produce dramatic improvements in growth and efficiency for Nvidia’s largest clients, analysts remain optimistic about the sustainability of current investment levels. Morgan Stanley notes that average capital expenditure relative to revenue is at a healthy level, with sufficient cash flow to support continued spending. “Nvidia’s results will dispel concern and drive share price rebounds for the overall AI supply chain,” said analyst Charlie Chan.
However, some caution remains. Critics argue that AI hardware stocks, including Nvidia, are trading at high multiples with limited room for error. Allspring’s VanCronkhite warned that while the current investment climate is favorable, the risks associated with AI hardware investments remain significant. “We’re not at the point where investors are ready to dump stocks, but they’re starting to ask questions about the ROI from AI,” VanCronkhite noted.
In other market news, Netflix Inc. saw its shares rise 1.5% to a record high, reflecting a more than 40% gain for the year. The company’s strategic focus on improving profitability has significantly outperformed other streaming stocks.
As Nvidia prepares to report its earnings, the spotlight remains on how AI investments will shape the future of the tech sector and influence stock performance across the industry.
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