Nvidia Surges as Meta and Microsoft Double Down on AI Infrastructure
25min read Nvidia (NVDA) has emerged as the clear beneficiary of a renewed wave of AI investment from tech giants, with its stock climbing sharply in May 2025 as Microsoft (MSFT) and Meta (META) unveiled aggressive plans to expand their AI compute infrastructure. The semiconductor leader’s shares rose 4.2% in premarket trading on May 1 to $113.52, marking a rebound after a turbulent year marred by geopolitical headwinds and investor skepticism about AI’s long-term demand.
Ask Aime: What's behind Nvidia's stock jump amid Microsoft and Meta's AI push?
At the heart of the rally are Microsoft and Meta’s multi-billion-dollar capital expenditure (capex) commitments. Microsoft reported a 51% year-over-year jump in third-quarter capex to $16.7 billion, driven by its $80 billion AI infrastructure pledge for fiscal 2025. The company emphasized optimizing data-center efficiency through hardware and software advancements, directly aligning with Nvidia’s dominance in GPU-driven AI training and inference systems. Meanwhile, Meta revised its annual capex forecast upward to $64–72 billion, citing soaring internal demand for computing power—particularly for Nvidia’s H100 GPUs—to support its AI initiatives.
The market’s enthusiasm is reflected in analyst sentiment. Prior to Nvidia’s May 28 earnings report, 35 of 41 analysts rated the stock a “Buy,” with an average 12-month price target of $165.22—implying a 51.7% potential upside from April’s closing price. The most optimistic estimate reached $200, underscoring investors’ belief that AI infrastructure spending will remain a growth engine for years.
Yet challenges linger. U.S. export restrictions on AI chips to China forced nvidia to record a $5.5 billion charge in Q1, and geopolitical risks persist. However, the firm’s position as the de facto supplier for hyperscalers like Microsoft and Meta—both of which have multi-year infrastructure commitments—appears unshakable.
The data underscores Nvidia’s strategic advantage. Meta’s CFO Susan Li revealed that internal AI compute demand is outpacing capacity even as new facilities come online, while Microsoft’s Nadella highlighted the need for “hardware-software synergy” to reduce costs and improve model performance—areas where Nvidia leads. AMD (AMD), a key competitor, also saw premarket gains, reflecting broader sector optimism, but lacks Nvidia’s AI ecosystem dominance.
In conclusion, Nvidia’s May surge signals a turning point for the AI hardware market. With Microsoft and Meta’s capex plans anchoring demand, and analysts forecasting significant upside, the stock’s trajectory hinges on execution against these commitments. While trade tensions and competitive pressures pose risks, the hyperscalers’ multi-decade AI investments—bolstered by rising GPU utilization rates and software-hardware integration—position Nvidia to sustain its leadership. At current valuations, the stock’s potential 50%+ upside suggests investors are pricing in a future where AI infrastructure remains the bedrock of tech innovation, and Nvidia is its indispensable architect.
