TLDR
- Nvidia stock climbed 2.5% Monday following a 7.9% Friday rally driven by tech company AI spending plans
- Tech giants expected to spend over $650 billion on capital expenditure in 2026, heavily focused on AI infrastructure
- Analysts predict OpenAI’s $100 billion fundraising will benefit Nvidia, AMD, and Broadcom
- Stock still faces headwinds from tech rotation, custom chip competition, and memory cost increases
- February 25 earnings report expected to show 71% EPS growth and 67% revenue increase year-over-year
Nvidia shares rose 2.5% Monday, closing at $190.04. The gain extended a strong 7.9% rally from Friday that snapped a five-day decline.
The catalyst? Massive capital spending announcements from tech giants. Google parent Alphabet and Amazon led the charge with hefty infrastructure budgets.
Big U.S. tech companies are now projected to exceed $650 billion in capital expenditure for 2026. Most of that money will flow toward AI infrastructure buildout.
Capital Spending Wave Benefits Chip Makers
William Blair analyst Sebastien Naji sees Nvidia as a prime beneficiary. “The massive step-up in capex now expected in 2026 is likely to greatly benefit merchant accelerator providers like Nvidia,” he wrote.
Despite the recent gains, Nvidia shares remain barely positive for 2026. The stock has battled multiple headwinds in recent weeks.
Investor rotation away from technology stocks has pressured shares. Questions about OpenAI’s spending sustainability have also created uncertainty.
The rise of custom AI chips threatens Nvidia’s market dominance. Rising memory component costs add another layer of concern for investors.
OpenAI Fundraising Could Shift Sentiment
D.A. Davidson analysts believe OpenAI’s planned fundraising could reverse some bearish sentiment. The ChatGPT developer aims to raise up to $100 billion.
“We expect that as investors go back to seeing OpenAI as a winner, the public companies in its orbit could re-rate considerably,” analyst Gil Luria wrote. “Most importantly that should drive outperformance in Nvidia.”
The optimism extends beyond Nvidia. Advanced Micro Devices gained 2.0% Monday while Broadcom added 2.3%.
Both companies have supply deals with OpenAI. The entire AI chip sector appears to be catching a bid from the fundraising news.
Earnings Report Approaches
Nvidia reports quarterly results on February 25. Wall Street expects earnings per share of $1.52, representing 70.79% growth from last year’s comparable quarter.
Revenue projections sit at $65.56 billion. That would mark a 66.68% increase year-over-year.
Full-year estimates call for $4.66 in earnings per share on $212.62 billion in revenue. Those numbers represent growth of 55.85% and 62.93% respectively.
The stock trades at a forward P/E ratio of 25.33. That’s below the semiconductor industry average of 26.96.
Nvidia’s PEG ratio stands at 0.55, well under the industry average of 2. The company currently holds a Zacks Rank of #2, indicating a Buy rating.
The semiconductor sector ranks in the top 39% of all industries based on Zacks Industry Rank methodology.