Jensen Huang: AI Spending to Exceed $4 Trillion
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Source: NASDAQ.COM
- AI Spending Outlook: Nvidia projects that global AI spending could exceed $4 trillion by 2030, indicating the immense potential of the AI market, which could further drive Nvidia's stock price upward.
- Investment in Computing Power: Jensen Huang emphasizes that hyperscalers must continue to invest in computing capabilities, as 'compute is profit,' directly impacting demand for Nvidia's chips and infrastructure, thereby boosting company revenue.
- Increased Competitive Pressure: As the AI arms race intensifies, hyperscalers must demonstrate returns on their AI investments, as any slowdown in spending could allow rivals to gain an advantage, potentially affecting Nvidia's market position.
- Valuation Potential: Analysts note that Nvidia's PEG ratio stands at 0.66, suggesting that the market may be undervaluing its future growth potential; if AI spending grows as expected, Nvidia's stock could be viewed as a highly attractive investment opportunity.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 214.250
Low
200.00
Averages
264.97
High
352.00
Current: 214.250
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is an artificial intelligence (AI) infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. Its segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing and networking platforms and AI solutions and software, and automotive platforms and autonomous and electric vehicle solutions, including software. The Graphics segment includes GeForce GPUs for gaming and personal computers (PCs), and Quadro/NVIDIA RTX GPUs for enterprise workstation graphics. Its technology stack includes the foundational NVIDIA CUDA development platform that runs on all NVIDIA GPUs, as well as hundreds of domain-specific software libraries, frameworks, algorithms, software development kits (SDKs), and application programming interfaces (APIs). Its platforms address four markets, which include Data Center, Gaming, Professional Visualization, and Automotive.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Capex Expectations: The four major hyperscalers are projected to spend around $650 billion on capital expenditures in 2023, with expectations to exceed $1 trillion by 2027, positioning Nvidia to benefit significantly from this massive spending, driving future growth.
- Significant Growth Rate: Nvidia's revenue grew by 85% year-over-year in Q1, a remarkable figure for a megacap company, suggesting that the market has yet to fully recognize its value; if valued similarly to peers, Nvidia's stock could be 2 to 3 times its current price, highlighting its undervalued potential.
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- Improved Investor Sentiment: With the improvement in market sentiment, investor interest in high-risk assets has increased, potentially leading to a shift of funds from the bond market to the stock market, enhancing the upward momentum of equities.
- Economic Recovery Expectations: The optimism surrounding the Iran deal not only boosts stock market performance but may also promote recovery in related sectors, particularly in energy and technology, further driving economic growth.
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- Capital Expenditure Plans: Despite facing significant capital spending of $20 billion to $25 billion in 2026, which could lead to dilution and execution risks, Nebius benefits from hyperscaler-backed demand and Nvidia's investment, providing strategic validation for its expansion.
- Investment Return Potential: Although Nebius's ambitious growth targets require an annualized return of 18.4% to turn a $500 monthly investment into $1 million, its revenue forecasts and market demand suggest it could be a smart long-term investment choice, even though it is not currently recommended by The Motley Fool Stock Advisor.
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