Source: Wind

According to Thomson Reuters in Hong Kong, on October 14, $NVIDIA (NVDA.US)$ the stock price closed at a historic high. Currently, Wall Street is preparing for earnings season, and this chip manufacturer's top customers will all disclose their spending plans on artificial intelligence infrastructure.

Since the beginning of this year, nvidia's stock price has risen by nearly 180%, soaring more than 9 times since the beginning of 2023. The company is widely regarded as the "shovel stock" of ai and has always been the biggest beneficiary of the ai boom, which began in November 2022 with the launch of OpenAI's ChatGPT. Nvidia's Graphics Processing Units (GPUs) are used to create and deploy advanced ai models, providing support for ChatGPT and similar applications.

including$Microsoft (MSFT.US)$and$Meta Platforms (META.US)$Please use your Futubull account to access the feature.$Alphabet-C (GOOG.US)$And$Amazon (AMZN.US)$Companies, including those in the industry, are buying a large number of nvidia's GPUs to build computer clusters for their advanced ai work, and all these companies will report quarterly performance before the end of October.

Analysts at Mizuho state that nvidia accounts for a significant portion of the tens of billions spent annually by top technology companies on ai, controlling about 95% of the ai training and inference chip market.

In the past five quarters, nvidia's revenue has more than doubled each quarter, with at least two quarters seeing growth by over 2 times. According to LSEG's data, the growth for the remainder of this year is expected to slow moderately, with analysts projecting around an 82% increase in the quarter ending in October, to $32.9 billion.

Nvidia recently stated that there is a "crazy" demand for the next generation AI GPU Blackwell, expecting new products in the fourth quarter to bring in billions of dollars in revenue.

Nvidia's market cap is currently $3.4 trillion, making it the second largest US listed company by market cap, second only to Apple with a market cap of approximately $3.55 trillion.

When will the AI market welcome a turning point?

Stock prices of AI companies led by Nvidia continue to rise, with Wall Street focusing on when the AI trade frenzy will reach a turning point.

Goldman Sachs analyst wrote in a report on October 10th: "Although these stocks (AI infrastructure related stocks such as Arm, etc.) seem relatively expensive compared to history, the demand for AI may lead to large tech companies exceeding investors' and analysts' current expectations in capital expenditure in this field."$Taiwan Semiconductor (TSM.US)$Google, Microsoft, Amazon, and Meta all stated that by next year, they will continue to invest heavily in AI infrastructure, benefiting AI hardware companies led by Nvidia. Goldman Sachs stated that overall, large tech companies will spend $215 billion and $250 billion on AI capital expenditure in 2024 and 2025 respectively.

Google, Microsoft, Amazon, and Meta all stated that by next year, they will continue to invest heavily in AI infrastructure, benefiting AI hardware companies led by Nvidia. Goldman Sachs stated that overall, large tech companies will spend $215 billion and $250 billion on AI capital expenditure in 2024 and 2025 respectively.

OpenAI recently launched a round of $6.6 billion financing, and it is expected that these funds will also be invested in hardware companies such as Nvidia to continue developing its artificial intelligence models.

JPMorgan analyst Harlan Sur predicts that semiconductor industry revenue will grow by 6% to 8% in 2024. He stated: "We are still bullish on semiconductor and semiconductor equipment stocks, as we believe the stock market will continue to rise. We expect an improvement in supply and demand in the second half of 2025, and profits in the second half of 2025 to stabilize/increase."

However, the slowdown in investments will eventually arrive, the question is when. AI software usually requires subscriptions from users, while hardware is a one-time sale. Therefore, some analysts have also warned that AI chip stocks are in a bubble, and once the massive tech companies reduce their huge spending on AI infrastructure, the bubble will eventually burst.

In fact, recent earnings reports from tech giants show that the gap between their massive spending on AI infrastructure and investment returns is widening, testing the patience of Wall Street. Google, Microsoft, and Amazon stocks all experienced a decline in the late summer of this year, as their quarterly financial reports revealed that these companies spent billions of dollars on artificial intelligence.

Davidson analyst Gil Luria stated: "We still believe that the tech giants' spending on datacenter infrastructure will remain strong in the next two years, but capital expenditures by mega-cap companies will eventually peak, possibly as early as next year."

Editor/rice