The AI Spending Surge: A Catalyst for Nvidia’s Next Phase

Nvidia US67066G1040

After staging a robust two-day recovery, Nvidia shares experienced a modest pullback in the latest session. Market attention remains fixed on the extraordinary capital expenditure budgets announced by major technology firms, signaling an unabated build-out of artificial intelligence infrastructure. This raises a pivotal question for investors: how enduring will this demand surge for Nvidia's semiconductors prove to be?

• The stock recently posted significant gains, halting a prior five-session losing streak.
• The primary catalyst is the sharply rising capital expenditure (capex) guidance from the largest internet conglomerates.
• The next critical test arrives with the company's quarterly earnings report on February 25.

The equity's recent performance has been volatile. A rally of approximately 7.9% last Friday, followed by a further 4% advance on Monday, decisively ended a period of weakness. Data from Bloomberg highlights the scale of the move: measured by the increase in market capitalization, last Friday's gain ranked among the largest single-day appreciations in stock market history, adding roughly $325 billion to Nvidia's market value.

From a technical analysis perspective, a key development was the share price climbing back above its closely watched 50-day moving average. This was followed by a moderate retreat yesterday, with the stock closing at $188.54 after opening the session at $191.40.

The $650 Billion Capex Wave Driving Demand

The fundamental tailwind stems from the investment blueprints of technology's titans. According to Forbes, the four largest internet companies collectively aim to deploy around $650 billion in capital expenditures this year—an increase of roughly 60% compared to the previous year.

Amazon's plans are particularly striking, with a reported $200 billion capex target for 2026, representing a 51% year-over-year jump. Further insight came from AWS CEO Matt Garman, who told The Motley Fool that the cloud unit continues to utilize some six-year-old Nvidia A100 chips because demand continues to outpace supply. He stated explicitly that AWS has "never retired an A100 server."

Other hyperscalers have communicated similarly substantial budgets:
* Alphabet: Targeting $175 to $185 billion in capex for 2026.
* Meta Platforms: Anticipating $115 to $135 billion for 2026, following an estimated $72.2 billion in 2025.

OpenAI Funding and Executive Commentary

Analysts at DA Davidson noted that a planned funding round for OpenAI, potentially reaching $100 billion, could improve sentiment for publicly-traded companies with close ties to the AI research lab. Analyst Gil Luria, cited by Barron's, suggested such firms could see "significant re-ratings" if investors categorize OpenAI as a clear winner.

Addressing concerns over the sustainability of the current investment cycle, Nvidia CEO Jensen Huang offered a bullish perspective. During an appearance on CNBC's "Halftime Report," he characterized the ongoing wave as "the largest infrastructure buildout in human history," citing "extremely high" demand for computing power. He provided examples, including Meta's shift from traditional CPU-based recommendation systems to generative AI and AWS's use of Nvidia-based AI for product recommendations.

Despite the recent recovery, the broader market context shows Nvidia shares still trading below their 52-week high of $212.19, reached in late October 2025. On valuation, The Motley Fool's analysis places Nvidia at approximately 25 times expected earnings, up from around 24 times at the market low in spring 2025.

All eyes now turn to February 25, when Nvidia releases its fourth-quarter results for fiscal year 2026. The accompanying guidance will be scrutinized for evidence that the massive customer investment budgets now being announced are translating into concrete, sustained demand for AI hardware.

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