TLDR
- Nvidia stock rose 0.7% in premarket trading to $171.95, ending a brief decline following its recent earnings report
- CEO Jensen Huang predicts data center operators will spend up to $4 trillion on AI infrastructure between now and 2030
- New Blackwell Ultra GB300 chips deliver 50 times more performance than previous H100 chips and are now shipping to major customers
- Major tech companies plan over $350 billion in combined annual spending, with Alphabet, Meta, Amazon, and Microsoft leading the charge
- Nvidia stock trades at a forward P/E ratio of 38.7, below its 10-year average of 60.6, suggesting potential undervaluation
Nvidia shares climbed 0.7% to $171.95 in premarket trading Wednesday morning. The chip maker appears to be recovering from a recent dip following its earnings report.
The stock fell 2% on Tuesday, extending a decline that began after the company’s latest quarterly results. Concerns about sales in China had weighed on investor sentiment.
The recent pullback has been modest compared to the stock’s overall performance this year. Nvidia shares have gained 27% year-to-date despite the post-earnings weakness.
Wall Street analysts remain largely positive about the company’s prospects. Many praised the earnings report and highlighted potential catalysts ahead.
Ken Mahoney, president of Mahoney Asset Management, said the results don’t indicate the AI growth story is ending. He noted that strong growth continues across the business.
Other semiconductor stocks showed mixed performance in premarket trading. Advanced Micro Devices gained 0.5% while Broadcom slipped 0.2%.
Blackwell Ultra Chips Drive Next Phase of Growth
Nvidia has begun shipping its new Blackwell Ultra GB300 chips to customers. The processors deliver 50 times more performance than the previous H100 architecture in certain configurations.
The new chips target AI reasoning models that require massive computing power. CEO Jensen Huang says these models consume up to 1,000 times more processing capacity than traditional language models.
Major cloud providers have become early adopters of the technology. OpenAI, Amazon Web Services, Microsoft Azure, and Google Cloud are among the first customers receiving the new chips.
Nvidia’s data center segment generated 88% of the company’s $46.7 billion in second-quarter revenue. The division benefited from continued strong demand for AI processors.
Revenue grew 56% compared to the same quarter last year. The company expects the GB300 chips to fuel additional growth in the coming quarters.
Tech Giants Increase AI Spending Plans
Major technology companies have increased their capital expenditure forecasts for 2025. The spending will largely focus on AI infrastructure and data center expansion.
Alphabet raised its 2025 spending plan from $75 billion to $85 billion. The company continues to invest heavily in its cloud computing and AI capabilities.
Meta Platforms increased the low end of its guidance from $64 billion to $66 billion. The social media giant could spend as much as $72 billion on infrastructure this year.
Amazon’s capital expenditure could exceed $118 billion in 2025. This would represent a record level of investment for the e-commerce and cloud computing company.
Microsoft spent $88 billion during its fiscal year 2025 that ended in June. The software giant plans to increase spending further in the current fiscal year.
The four companies combined plan to spend more than $350 billion annually on infrastructure. Nvidia expects to capture a substantial portion of the chip-related spending due to its market leadership.
During the company’s quarterly conference call, Huang provided an even more ambitious forecast. He predicts data center operators will spend up to $4 trillion on AI infrastructure between now and 2030.
Investors will watch Broadcom’s earnings report on Thursday for additional insights. The company’s custom AI chips could potentially challenge Nvidia’s market dominance.
Nvidia stock currently trades at a price-to-earnings ratio of 49.6. This represents a discount to its 10-year average of 60.6.
Wall Street analysts project earnings of $4.48 per share for fiscal 2026. This would give the stock a forward P/E ratio of 38.7.
The company plans to launch its Rubin GPU architecture next year. Early estimates suggest Rubin could deliver 3.3 times more performance than Blackwell Ultra.
Analysts expect Rubin could help drive earnings to $6.32 per share in fiscal 2027. This would represent 41% growth from current projections.
