Nvidia shares roar back as doubts about Big Tech fade

The Nvidia logo is displayed on a sign at the Nvidia headquarters on Feb. 26, 2025 in Santa Clara, Calif. Photo by Justin Sullivan/Getty Images

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After several months in the wilderness, Nvidia Corp. shares have found their way again as doubts about Big Tech spending subside, trade tensions with China ease, and new chip buyers emerge.

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The stock rallied last week and is on track for the best month in a year after a series of long-term sales agreements during U.S. President Donald Trump’s trip to the Middle East. That followed a tariff detente between the U.S. and China and an earnings season that showed Nvidia’s biggest customers remain full-steam ahead on capital spending related to artificial intelligence infrastructure, where the chipmaker dominates.

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The stock last week advanced more than 40 per cent from an April low and was less than six per cent from where it closed on Jan. 24, the day before the emergence of DeepSeek’s R1 model sparked fears that cheaper AI development would hurt sales, sending Nvidia and other technology stocks tumbling.

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“This season showed that the hyperscalers continue to increase their estimates for what they’re going to spend, and Nvidia remains the primary beneficiary of that capex,” said Robert Ruggirello, chief investment officer at Brave Eagle Wealth Management. “Everyone wants off the train before the party stops, but I don’t know why they expect it to stop.” With respect to spending on AI, “I think we’re in the second inning of a nine-inning game.”

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Since the start of the month, Nvidia has blown through both its 50-day and 200-day moving averages, positive technical signals for both its near- and long-term momentum. The rally has added about US$1 trillion in market capitalization since its April low, pushing it ahead of Apple Inc. in market capitalization and second only to Microsoft Corp.’s among the world’s biggest stocks.

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Nvidia’s latest rally marks a stark turnaround from the biggest drawdown in the stock since 2022. At its low last month, the chipmaker’s shares had fallen 37 per cent from a January all-time high amid concerns that Big Tech’s chip-buying binge was set to cool and trade hostilities between the U.S. and China threatened a key market.

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Instead of pulling back, tech giants upped the ante. Microsoft Corp. and Alphabet Inc. pledged to spend even more next year, while Meta Platforms Inc. raised its forecast for capital expenditures on the back of AI-related demand tailwinds. Along with Amazon.com Inc., capital expenditures for the four companies are projected to reach nearly US$330 billion in 2026, up six per cent from estimated spending this year, according to the average of analyst estimates compiled by Bloomberg.

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While risks of a negative shift in U.S. trade policies with regard to China remain, Wall Street has been encouraged by new business opportunities in the Middle East.

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Bank of America Corp. on Wednesday raised its price target on Nvidia to US$160 from US$150 and reiterated its buy rating on the stock. Analyst Vivek Arya estimated commitments for an infrastructure project in Saudi Arabia reported this week could generate as much as US$5 billion annually for Nvidia and competitor Advanced Micro Devices Inc. and help offset lost sales as a result of chip export restrictions on China.