Nvidia Caught Between Sovereign AI Boom and SpaceX Rotation

Nvidia's record $81.6B revenue, with sovereign AI spending tripling to $30B, faces stock headwinds from SpaceX IPO cash-outs and Broadcom's AI guidance miss.

Nvidia’s stock is navigating a rare moment of contradiction: record-breaking revenue from government-funded artificial intelligence infrastructure clashes with a market rout triggered by the impending initial public offering of a rocket company. The chipmaker’s shares closed Friday at €177.28, sitting precisely on their 50-day moving average, while a swirl of competing forces — structural demand and short-term capital rotation — pulls at the valuation.

The clearest sign of Nvidia’s shifting customer base comes from its “sovereign AI” business. In fiscal 2026, governments and state-backed entities spent $30 billion on Nvidia hardware, more than triple the prior year’s tally. That segment grew at more than 4.6 times the rate of overall revenue. Countries such as the United Kingdom, Japan, Saudi Arabia, Canada, France, the Netherlands and Singapore are treating computing capacity as a matter of national infrastructure, building state-funded data centres to shield sensitive sectors — health, defence, education — from reliance on US cloud providers. Unlike corporate buyers, sovereign clients do not pause spending because of a weak earnings cycle. That decentralised demand base now provides a buffer against any pullback by the hyperscalers, which still account for more than half of Nvidia’s revenue. Two direct customers alone represent 36 percent of the total.

Yet the share price is under pressure from an entirely different direction. Hedge funds are liquidating large technology positions to raise cash for the SpaceX IPO, which targets a valuation of $1.77 trillion — a sum that would instantly make Elon Musk’s rocket builder the seventh-largest listed US company. The Roundhill Magnificent Seven ETF has lost roughly 2.4 percent since the start of June. Nvidia has been swept into the downdraft, even as investors openly ignore the fact that SpaceX posted a net loss of nearly $5 billion in 2025.

The selloff follows a sector-wide jolt on June 3. After the closing bell, Broadcom reported quarterly revenue of $22.19 billion, up 48 percent year-on-year, and beat earnings expectations. But the market punished the stock after Broadcom guided for $16 billion in AI chip sales in the third quarter — roughly 7 percent below the consensus estimate of $17.2 billion. Broadcom shares fell more than 13 percent, dragging the entire semiconductor space lower. Nvidia was caught in the crossfire, even though its own fundamentals had not been called into question. Broadcom had rallied roughly 40 percent from the start of the year and hit an all-time high the day before the report; the reaction was a valuation correction, not a fundamental one.

Nvidia’s quarterly results stand in stark contrast to the market noise. Revenue hit a record $81.6 billion, 85 percent higher than the same period a year earlier. Data-center sales jumped 92 percent to $75.2 billion, driven by the ramp of Blackwell?300 products and demand for InfiniBand, Spectrum?X Ethernet and NVLink solutions. Crucially, hyperscalers now account for roughly half of data-center revenue, with the other half coming from AI cloud providers, enterprise customers and sovereign buyers. That 50-50 split marks a structural shift away from dependence on a handful of Big Tech budgets. Analysts remain bullish: DA Davidson reiterated a buy rating with a $300 price target and placed Nvidia on its “best-of-breed” list, while hedge fund manager Dan Loeb argues the stock is undervalued despite a market capitalisation approaching $5 trillion.

On the charts, the €177.28 closing level coincides with the 50-day moving average, a line that has historically acted as a pivot point. The 200-day average sits at €162.14, roughly 9 percent lower, offering a deeper support reference. The consensus analyst target of €258.25 implies upside of nearly 46 percent. The technical tension reflects the gap between extraordinary quarterly execution and the market’s fear that any slowdown in AI investment could reprice the entire sector.

Nvidia’s annual general meeting on June 24 may provide fresh catalysts. The board has authorised an additional $80 billion buyback programme and raised the quarterly dividend to $0.25 per share, a clear signal of confidence in free cash flow generation. Shareholders will also vote virtually on director compensation, ten board seats, and proposals related to greenhouse gas emissions and diversity policies. The underlying dynamics of the AI buildout remain intact: at a recent Bank of America technology conference, 37 semiconductor executives confirmed that supply, while growing fast, still cannot meet the extraordinary demand. If the 50-day line holds as support, the 52-week high of €202.50 re-enters striking distance — provided the SpaceX rotation does not deepen first.