After a huge run higher, Nvidia (NASDAQ: NVDA) stock hasn’t even been keeping up with the overall market in recent months. There are several reasons for that, but the big question for investors is whether it’s now time to take advantage of Nvidia’s stagnant share price.
The stock soared about 85% over the last year, yet it is lower than it was four months ago, even as the S&P 500 has a total return of about 4% in that time. But now it looks like there are over 300 billion more reasons to buy the stock. That’s because several big tech companies plan to spend as much as $320 billion on data centers and artificial intelligence (AI) infrastructure over the next year.
Nvidia’s recent success is relatively easy to explain. Its advanced AI graphics processing unit (GPU) chips are in high demand. Using management’s guidance for its soon-to-be-reported fiscal fourth quarter, revenue for the fiscal year ended in late January should show year-over-year growth of about 110%. That’s especially impressive considering quarterly revenue is approaching $40 billion.
Nvidia also shared its plans with investors for continued innovation that should keep driving demand. Sales of its H100 and H200 GPU chips have been boosting revenue growth, and Nvidia now has its Blackwell AI architecture in production.
CEO Jensen Huang has called demand for Blackwell “insane.” Investors will hear an update on its Blackwell sales when Nvidia reports earnings on Feb. 26. The company might also discuss the next-generation Rubin AI platform that is due in 2026.
One recent headwind for Nvidia stock was the surprising announcement last month from privately owned Chinese start-up DeepSeek. That company reportedly created a high-performing large language model (LLM) for just $6 million. While many question the authenticity of that total capital cost, the DeepSeek product raised uncertainty about how much large-cap tech companies would continue to spend on Nvidia AI products.
But those companies aren’t throttling back on spending. Meta Platforms, Amazon, Alphabet, and Microsoft each announced spending plans for data centers and AI infrastructure in 2025. As a group, the investments could total as much as $320 billion over the course of just one year.
Amazon expects to lead the way with $100 billion in capital expenditure. CEO Andy Jassy stated, “The vast majority of that capex spend is on AI for AWS (Amazon Web Services).” Alphabet plans about $75 billion and Meta $65 billion. Microsoft will continue on its plan for $80 billion in AI investments through June of this year.
