Nvidia's AI Momentum Surges as Tech Giants Boost Spending and Analysts Remain Bullish

The latest earnings reports from American tech giants have generally been underwhelming, but there is a silver lining for Nvidia. The chip maker’s key clients, including Microsoft, Alphabet Inc., Amazon, and Meta Platforms Inc., have all pledged to increase capital spending in the coming year. Together, these four companies invested a record $59 billion in data center equipment and other fixed assets during the third quarter.

According to Mike Bailey, Research Director at Fulton Breakefield Broenniman, these technology behemoths' spending plans offer favorable prospects for Nvidia shareholders. With its stock already doubling this year and adoption of AI accelerating, Nvidia could see further upward momentum, especially with investors perceiving ongoing commitments from major buyers as a compelling reason to sustain or increase their investments in the company.

Before Nvidia reports its own earnings on November 20, the overall outlook painted by the tech giants’ earnings remains positive for the chipmaker. Nvidia's market cap had seen a substantial dip of nearly $900 billion from its highs in June to the lows by late August, amid skepticism around returns on AI investments and delays of its upcoming Blackwell chips. However, following CEO Jensen Huang’s assurances of steady progress in Blackwell’s production and robust evidence of continued AI spending, Nvidia shares have rebounded, alleviating investors' concerns.

Wall Street analysts remain overwhelmingly bullish on Nvidia. Out of 75 analysts, 67 recommend buying the stock. Forecasts have also been trending upward, with profit expectations for the coming year increasing by about 10% over the past three months. This has helped reduce Nvidia's valuation, with its forward price-to-earnings ratio now around 39 times, down from over 60 times at its peak last year.

Analysts Sebastien Naji and Jason Ader from William Blair have adjusted their forecasts for the fiscal year 2026 upwards, expressing increased confidence in Nvidia's leading position in the AI infrastructure market. They highlighted that AI seems to be advancing at full speed, reinforcing Nvidia’s strategic advantage.