TLDR
- Nvidia stock jumped 2.5% Monday after a 7.9% gain Friday, fueled by massive tech company spending announcements
- Big tech firms are projected to spend over $650 billion on capital expenditure in 2026, with much of it going to AI infrastructure
- OpenAI’s planned $100 billion fundraising could boost Nvidia, AMD, and Broadcom stocks, according to D.A. Davidson analysts
- Nvidia faces headwinds including tech stock rotation, concerns about OpenAI spending sustainability, and rising memory component costs
- The company reports earnings February 25, with analysts expecting $1.52 EPS and $65.56 billion in revenue
Nvidia shares climbed 2.5% Monday to close at $190.04. The rally extended Friday’s 7.9% gain that ended a five-day losing streak.
The surge came after Google parent Alphabet and Amazon announced hefty capital expenditure plans. Large U.S. tech companies are now expected to spend more than $650 billion on capex in 2026.
A substantial portion of that spending will fund AI infrastructure. That puts Nvidia in prime position to benefit.
“The massive step-up in capex now expected in 2026 is likely to greatly benefit merchant accelerator providers like Nvidia,” William Blair analyst Sebastien Naji wrote in a research note.
The stock has struggled this year despite Monday’s gains. Nvidia shares remain only slightly positive for 2026.
Several headwinds have weighed on the stock. Investors have rotated away from technology stocks in recent weeks.
Concerns about OpenAI’s spending sustainability have also pressured shares. The rise of custom AI chips and increasing memory component costs added to the worries.
OpenAI Fundraising Could Provide Tailwind
But one of those concerns might soon ease. D.A. Davidson analysts expect OpenAI’s planned fundraising of up to $100 billion to lift associated stocks.
“We expect that as investors go back to seeing OpenAI as a winner, the public companies in its orbit could re-rate considerably,” D.A. Davidson analyst Gil Luria wrote. “Most importantly that should drive outperformance in Nvidia.”
OpenAI supplies deals with multiple chip makers. Advanced Micro Devices rose 2.0% Monday while Broadcom gained 2.3%.
Both AMD and Broadcom have supply agreements with the ChatGPT developer. The OpenAI news appears to be lifting the entire AI chip sector.
Earnings on the Horizon
Nvidia reports earnings on February 25. Analysts expect earnings per share of $1.52, up 70.79% from the same quarter last year.
Revenue is projected at $65.56 billion. That would represent a 66.68% jump from the year-ago quarter.
For the full fiscal year, consensus estimates call for earnings of $4.66 per share on revenue of $212.62 billion. Those figures represent increases of 55.85% and 62.93% respectively.
The stock currently trades at a forward P/E ratio of 25.33. That’s below the industry average of 26.96.
Nvidia holds a Zacks Rank of #2, indicating a Buy rating. The company’s PEG ratio stands at 0.55, well below the industry average of 2.
The semiconductor sector ranks in the top 39% of all industries based on the Zacks Industry Rank.
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