Nvidia stock extended its recent rally early on Monday, as investors continued to assess the outlook for artificial intelligence infrastructure spending following strong capital expenditure guidance from major technology companies.
In early trading, Nvidia shares were up about 4% at $192.40. The move followed a 7.9% gain on Friday, which snapped a five-day losing streak.
The rebound has been driven largely by renewed optimism around sustained investment in data centres and advanced computing systems used for AI workloads.
Big Tech spending underpins Nvidia stock’s rally
Nvidia stock’s recent strength has been supported by hefty capital expenditure forecasts from Alphabet and Amazon.
Together with other major US technology firms, the two companies are expected to push total industry capital spending above $650 billion this year, with a significant portion directed toward artificial intelligence infrastructure.
However, despite Friday’s rebound and Monday’s early gains, Nvidia shares remain slightly lower for the year.
The stock has faced several headwinds, including a rotation away from technology shares, concerns over the sustainability of spending by OpenAI, the growing adoption of custom-designed AI chips by large customers, and rising memory component costs.
OpenAI fundraising seen as potential catalyst
Analysts at DA Davidson said OpenAI’s planned fundraising round of up to $100 billion could improve sentiment toward companies closely linked to the AI developer.
“We expect that as investors go back to seeing OpenAI as a winner, the public companies in its orbit could re-rate significantly. Most importantly, that should drive outperformance in Nvidia,” DA Davidson analyst Gil Luria wrote in a research note on Monday.
Market participants have been closely monitoring OpenAI’s funding plans amid concerns that heavy capital requirements could weigh on long-term returns for companies supplying its computing infrastructure.
A successful fundraising effort could help alleviate some of those worries.
Huang defends scale of AI investment
Nvidia Chief Executive Officer Jensen Huang has also sought to reassure investors about the durability of the current spending cycle.
Speaking on CNBC’s “Halftime Report” on Friday, Huang said the technology industry’s surge in capital expenditures for AI infrastructure is justified and sustainable.
“The reason for that is because all of these companies’ cash flows are going to start rising,” Huang said.
He described the current wave of investment as the “largest infrastructure buildout in human history,” driven by what he called “sky-high” demand for computing power.
Huang said hyperscalers and AI-focused companies are deploying advanced systems to improve productivity and unlock new revenue streams.
Huang cited several examples of how Nvidia’s customers are using AI. He said Meta Platforms is shifting from traditional CPU-based recommendation systems to generative AI models and intelligent agents.
He also said Amazon Web Services is using Nvidia-powered AI to enhance product recommendations, while Microsoft is integrating AI into its enterprise software offerings.
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