Investors go big on Nvidia buying spree

Chipmaker adds more than $260B in capitalization

Nvidia Corp. shares are rallying back from last week's sell-off as some of the chip giant's biggest clients are doubling down on artificial intelligence investments.

The Santa Clara-based company's stock is up 15% this week, adding more than $260 billion in market capitalization and putting it on pace for its best weekly performance since last May. The surge comes after firms like Meta Platforms Inc., Alphabet Inc. and Microsoft Corp. pledged billions in AI investments.

“The future is AI,” said Paul Marino, chief revenue officer at GraniteShares. “And if the largest companies in the world are pouring tens of billions of dollars each into this, I think Nvidia has to be the big winner.”

The move is a sharp reversal from its April 19 plunge of 10%, the shares' worst day in more than four years, which came amid fears that enthusiasm for chipmakers had run too far too fast after Taiwan Semiconductor Manufacturing Co. scaled back its expansion outlook.

Nvidia currently dominates the lucrative market for accelerators that power data centers running complex computing tasks required for AI development. But the entire semiconductor industry is climbing, with the Philadelphia Stock Exchange Semiconductor Index, also known as the SOX, up 9.7% this week, compared with a 2.8% gain in the broader S&P 500 Index and a 4% jump in the techheavy Nasdaq 100 Index.

First-quarter reports “from key U.S. hyperscalers — Google, Microsoft and Meta — suggest meaningful upside to (current year capital expenditures), mostly driven by build out of AI infrastructure,” Bank of America Corp. analyst Vivek Arya said in a note to clients Thursday.

Meta shares were pressured Thursday, tumbling 11% after the Facebook-parent revealed that it will spend billions of dollars more than expected on AI this year. But Microsoft and Google-parent Alphabet were able to convince investors that spend

ing on AI is paying off.

Meanwhile, Amazon. com Inc., another big Nvidia customer, is slated to report first-quarter earnings Tuesday.

“I hate to say things are a no-brainer,” Marino said. “But if you take a look at all the budget lines and all the capex spending, where is that going? It's got to go to Nvidia, they have the best chips.”