FX168 Financial News (North America) - Nvidia (NVDA) is expected to announce its performance next month, but this week, the performance of its largest customer will set the tone for its stock price. Driven by optimistic sentiment towards the prosperity of artificial intelligence, its stock price is currently approaching a historical high.
Microsoft (MSFT), Alphabet Inc. (GOOG), Amazon.com Inc. (AMZN), and Meta Platforms Inc. (META) will all announce their performances in the coming days. Traders will closely monitor their capital expenditures to gauge the demand for Nvidia chips, which are highly praised for AI computing. Bloomberg data compiled shows that this group accounted for over 40% of Nvidia's sales in the second quarter.
Wall Street expects these four tech giants to announce record-breaking capital expenditures, but any disappointment regarding the pace of spending could impact Nvidia's stock price. Nvidia's stock price has nearly doubled this year, increasing its market cap by over 2 trillion dollars. This could be a crucial period for the entire stock market. Nvidia is the largest contributor to the S&P 500 index's gains this year, accounting for about a quarter of its 22% increase.
Dave Mazza, CEO of Roundhill Investments, stated: "If these companies publicly indicate that capital expenditures are increasing, even if only slightly, Nvidia indeed needs these to maintain its momentum. Any unfavorable factors could lead to a significant drop in the stock price."
According to Bloomberg's summary of analyst average estimates, these four tech giants are expected to invest a record-breaking 56 billion dollars in capital expenditures in the third quarter. Most of this spending will be used for Nvidia and other AI-related device manufacturers, with further increases expected in the coming quarters.
All signs indicate that AI-related spending will continue to remain robust. From chip equipment manufacturer ASML Holding NV to Taiwan Semiconductor Manufacturing Company, AI has been the highlight of this earnings season.
This trend has driven the rise in Nvidia's stock price. CEO Jensen Huang also assured that production of their new Blackwell chip is proceeding as planned and demand is strong. Nvidia is the largest beneficiary of massive investments in AI computing devices. The stock hit a historic high last week, with a current market cap of around 3.5 trillion dollars, slightly below Apple, which remains the world's most valuable company.
It is certain that concerns exist about all the expenditures by major tech companies in AI, as investors believe the billions of dollars these companies are investing produce relatively little revenue. Therefore, this will be another focal point when these companies report earnings this week.
"You must walk the fine line of investing," said Paul Marino, Chief Revenue Officer of Themes ETFs, so that investors will understand you "have not gone too far."
According to analysts' average forecasts summarized by Bloomberg, Nvidia's revenue is expected to more than double this year, reaching $125.6 billion. Next year, the chipmaker's fiscal year 2026 sales are expected to grow by 44% to $181 billion.
Of course, other notable beneficiaries of substantial AI spending this week include Broadcom, AMD, and Dell Technologies.
