(Bloomberg) — After several months in the wilderness, Nvidia Corp. shares have found their way again as doubts about Big Tech spending subside, trade tensions with China ease, and new chip buyers emerge.
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The stock rallied this week and is on track for the best month in a year after a series of long-term sales agreements during President Donald Trump’s trip to the Middle East. That followed a tariff detente between the US and China and an earnings season that showed Nvidia’s biggest customers remain full-steam ahead on capital spending related to artificial intelligence infrastructure, where the chipmaker dominates.
The stock has now advanced around 44% from an April low and is less than 6% from where it closed on Jan. 24, the day before the emergence of DeepSeek’s R1 model sparked fears that cheaper AI development would hurt sales, sending Nvidia and other technology stocks tumbling. Nvidia shares rose as much as 1.1% on Friday.
“This season showed that the hyperscalers continue to increase their estimates for what they’re going to spend, and Nvidia remains the primary beneficiary of that capex,” said Robert Ruggirello, chief investment officer at Brave Eagle Wealth Management. “Everyone wants off the train before the party stops, but I don’t know why they expect it to stop.” With respect to spending on AI, “I think we’re in the second inning of a nine-inning game.”
Since the start of the month, Nvidia has blown through both its 50-day and 200-day moving averages, positive technical signals for both its near- and long-term momentum. The rally has added about $1 trillion in market capitalization since its April low, pushing it ahead of Apple Inc. in market capitalization. At $3.29 trillion, Nvidia is now second only to Microsoft Corp.’s $3.37 trillion among the world’s biggest stocks.
Nvidia’s latest rally marks a stark turnaround from the biggest drawdown in the stock since 2022. At its low last month, the chipmaker’s shares had fallen 37% from a January all-time high amid concerns that Big Tech’s chip-buying binge was set to cool and trade hostilities between the US and China threatened a key market.
Instead of pulling back, tech giants upped the ante. Microsoft Corp. and Alphabet Inc. pledged to spend even more next year, while Meta Platforms Inc. raised its forecast for capital expenditures on the back of AI-related demand tailwinds. Along with Amazon.com Inc., capital expenditures for the four companies are projected to reach nearly $330 billion in 2026, up 6% from estimated spending this year, according to the average of analyst estimates compiled by Bloomberg.
