TLDR
- Nvidia projects data center spending will jump from $600 billion today to $3-4 trillion by 2030.
- Ken Griffin’s Citadel hedge fund increased its Nvidia stake by 414%, adding 6.5 million shares worth $1.5 billion.
- GPUs burn out after one to three years, creating a replacement demand cycle starting now.
- The stock trades at 42 times forward earnings, considered reasonable given growth expectations.
- Citadel cut its Palantir position by 48% while boosting Nvidia exposure.
Nvidia caught the attention of one of Wall Street’s most successful investors during the second quarter. Ken Griffin’s Citadel hedge fund boosted its position by 414%.
The firm added more than 6.5 million shares. This brings the total stake to roughly $1.5 billion at current prices.
Griffin made this move while cutting his Palantir holdings by 48%. The shift shows a clear bet on AI infrastructure over software.
Nvidia management expects global data center capital expenditures to reach $3 trillion to $4 trillion by 2030. That’s up from about $600 billion currently.
The forecast came during the company’s second-quarter earnings call. Management points to buildouts in Europe, the U.S., and China as key drivers.
GPU Replacement Cycle Adds to Demand
Data center GPUs have a limited lifespan. One Alphabet specialist estimates they last between one and three years.
Chips purchased when the AI boom started in 2023 are beginning to fail. This creates fresh demand on top of new capacity needs.
The replacement cycle means recurring revenue streams. Even after the initial AI buildout wraps up, data centers will need new hardware regularly.
AI hyperscalers have announced that 2026 capital spending will exceed 2025 levels. Cloud giants like Microsoft, Amazon, and Alphabet are investing hundreds of billions in infrastructure.
Nvidia trades at 42 times forward earnings. While not cheap, this valuation looks reasonable given the projected growth runway.
Why Griffin Chose Nvidia Over Palantir
Palantir’s stock has climbed more than 2,000% over three years. The company now trades at a price-to-sales ratio of 135.
For hedge funds like Citadel, taking profits from overextended winners is standard practice. Griffin locked in gains while redeploying capital to better-valued opportunities.
Other famous investors including Stanley Druckenmiller and Cathie Wood have made similar Palantir moves. Trimming doesn’t signal bearishnessâit’s about risk management.
Griffin’s Nvidia purchase suggests he believes infrastructure providers will dominate the next computing decade. Hardware matters more than software in this phase.
Nvidia’s competitive edge extends beyond chips. The CUDA software platform locks developers into a computing standard that rivals struggle to match.
Technological Lead Continues
Nvidia’s upcoming GPU architecturesâBlackwell Ultra and Rubinâwill extend its market position. Partnerships with OpenAI, Intel, and Oracle are still in early stages.
The company has delivered massive historical returns. A $10,000 investment made 10 years ago is now worth nearly $3 million.
Shares have jumped 1,220% since the AI race began in 2023. The stock carries a $4.5 trillion market cap.
Griffin isn’t abandoning AI investments. He’s rotating toward the infrastructure plays that power the entire ecosystem.
Citadel still holds approximately $130 million worth of Palantir stock. The firm maintains exposure while reducing concentration risk.
Europe has barely begun its AI data center buildout. The U.S. continues heavy spending while China expands its footprint.
These global trends support management’s aggressive spending forecasts. Nvidia stands positioned as the primary beneficiary of this infrastructure wave.
