Nvidia surges 7.6% as CEO Huang defends $660B AI capex buildout
CEO calls AI spending 'largest infrastructure buildout in human history' as tech recovery accelerates
Nvidia shares soared 7.6% to $184.88 on Friday as Chief Executive Officer Jensen Huang forcefully defended the massive artificial intelligence infrastructure spending taking place across the technology sector, calling the current capital expenditure wave "the largest infrastructure buildout in human history."
The rally, which added approximately $324 billion to Nvidia's market capitalization, came as Huang sought to reassure investors that the $660 billion being poured into AI infrastructure by major technology companies is both appropriate and sustainable. Speaking in an interview with CNBC, Huang dismissed concerns that the spending represents a bubble, instead characterizing it as a necessary reallocation of resources that will continue for seven to eight years before reaching equilibrium.
"This is not about printing money for AI processors," Huang said, according to a report from Calcalistech. "Companies are redirecting their annual budgets, previously allocated for replacing conventional servers, towards building AI factories."
The CEO's comments arrived just days after Nvidia's largest customers—including Meta Platforms, Amazon, Alphabet, and Microsoft—reported quarterly earnings that showed continued heavy investment in AI infrastructure. Those four companies, along with other major cloud providers, are expected to drive approximately $650 billion in AI-related capital expenditures this year alone, according to industry analysis cited by Bloomberg.
Huang, speaking at the World Economic Forum in Davos in January, had already framed the AI boom in historic terms, projecting that global AI infrastructure spending could reach $4 trillion by 2030. He noted that nations are increasingly investing in AI infrastructure as a strategic local resource, with Nvidia securing significant contracts in regions including India, Japan, and Saudi Arabia.
Analysts rushed to reaffirm their bullish positions on the chipmaker following Friday's rally. Goldman Sachs maintained its Buy rating with a $250 price target, suggesting nearly 35% upside from current levels. According to data from The Motley Fool, Nvidia now boasts 60 Buy ratings compared to just 4 Sell ratings from Wall Street analysts.
"Substantial hyperscaler investments are all going to Nvidia," said Gil Luria, analyst at DA Davidson, according to Seeking Alpha. "The company's dominant position in AI infrastructure means it remains the primary beneficiary of this spending wave."
Friday's surge helped Nvidia recoup some ground lost during a broader technology sector sell-off earlier in the week. The stock remains below its 52-week high of $212.18 but is well above its yearly low of $86.60. With a market capitalization of $4.24 trillion, Nvidia remains the world's most valuable semiconductor company and one of the largest corporations by market value.
The company's financial fundamentals continue to support its premium valuation. Nvidia reported trailing twelve-month revenue of $187.1 billion, with quarterly revenue growth of 62.5% year-over-year and earnings growth of 66.7%, according to Morningstar data. The company's gross margins remain robust at approximately 70%, though some analysts have projected a potential moderation to 71% as production scales.
However, concerns remain about the sustainability of such elevated capital spending levels. Some market observers have warned that the "AI Capital Expenditure Supercycle" could create inflationary pressures on energy and raw materials, while others question whether demand for AI services will grow quickly enough to justify the massive infrastructure investments currently underway.
For now, investors appear to be taking Huang at his word. The CEO's confidence in a multi-year buildout cycle, coupled with the continued commitment from Nvidia's largest customers to AI investment, has helped restore faith in the company's growth story. With the stock trading at 23.5 times forward earnings—down from its recent peaks—some analysts see Friday's rally as the beginning of a broader recovery for AI-related stocks.
"We're in the early innings of a generational transformation of the world's computing infrastructure," Huang said, according to comments reported by Seeking Alpha. "This buildout is appropriate, it's sustainable, and it's necessary."