(Bloomberg) — Shares of Nvidia Corp. have rebounded from last week’s selloff, as some of the chip giant’s biggest customers double down on investments in artificial intelligence.
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Shares of the Santa Clara, Calif.-based company jumped 15% this week, adding nearly $290 billion in market capitalization and posting its best weekly performance since last May. The increase comes after companies like Meta Platforms Inc., Alphabet Inc. and Microsoft Corp. have promised billions in investment in AI.
“The future is AI,” said Paul Marino, chief revenue officer at GraniteShares. “And if the biggest companies in the world each invest tens of billions of dollars in it, I think Nvidia has to be the big winner.”
The move is a sharp reversal from last Friday’s 10% plunge, the worst day for stocks in more than four years, which came amid concerns that enthusiasm for chipmakers had gone too far, too far. quickly, after Taiwan Semiconductor Manufacturing Co. lowered its expansion prospects. .
Nvidia currently dominates the lucrative market for accelerators that power data centers running complex computing tasks needed for AI development. But the entire semiconductor sector is on the rise, with the Philadelphia Stock Exchange Semiconductor Index, also known as SOX, up 10% this week, compared with a gain of 2. 7% for the broader S&P 500 index and a 4% jump for the tech-heavy index. Nasdaq 100 Index.
First-quarter reports “from leading U.S. hyperscalers – Google, Microsoft and Meta – suggest a significant increase in investment in CY24, driven primarily by AI infrastructure development,” Bank of America Corp. analysts wrote. led by Vivek Arya in a note to clients in April. 25.
Meta shares fell on Thursday, falling 11%, after Facebook’s parent company issued disappointing quarterly revenue forecasts and revealed it would spend billions of dollars more than expected on AI this year. But Microsoft and Google parent Alphabet managed to convince investors that spending on AI was already paying off.
Meanwhile, Amazon.com Inc., another big Nvidia customer, is expected to report first-quarter results on Tuesday.
“I hate to say things are self-evident,” Marino said. “But if you take a look at all the budget lines and all the capital expenditures, where is it going? It has to go to Nvidia, they have the best chips.
—With help from Jeran Wittenstein.
(Updates with closing prices throughout.)
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