What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) jumped 7.8% in the afternoon session after CEO Jensen Huang declared that the $660 billion tech industry investment in AI infrastructure is sustainable and justified.
Addressing concerns over aggressive spending by "hyperscalers" like Meta and Microsoft, Huang argued that these massive capital expenditures are supported by rising cash flows and "sky-high" demand. He framed the current expansion as the largest infrastructure buildout in history, where massive investments in computing power are essential to fuel the next generation of digital services and corporate profitability.
The rally was further supported by evidence of high hardware utilization and clear monetization pathways. Huang noted that even older chips remain fully rented out, while AI labs like OpenAI see revenue grow exponentially compared to their compute capacity.
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What Is The Market Telling Us
Nvidia’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 17 days ago when the stock dropped 3.8% on the news that rising geopolitical tensions between the US and Europe over control of Greenland sparked a broad, risk-off mood in asset markets. The sell-off was fueled by President Trump's push for the U.S. to acquire Greenland, reviving fears of trade confrontations and new tariffs against European allies. The tech-heavy Nasdaq index saw significant declines, with the "Magnificent Seven" technology stocks, Nvidia, Apple, Alphabet, Amazon, Meta, Microsoft, and Tesla, all sliding to start the week. This widespread downturn among major tech players weighed heavily on the overall market as investors reacted to the escalating political rhetoric.
Nvidia is down 1.2% since the beginning of the year, and at $186.59 per share, it is trading 9.9% below its 52-week high of $207.04 from October 2025. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $12,922.
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