Nvidia (NASDAQ:NVDA) just did it againback at record highs, and back as the world’s most valuable company. After a sharp bounce off its April lows, the stock has surged 67%, pushing its market cap to $3.8 trillion, edging past Microsoft. What’s fueling the run? One thing: relentless AI spending. Despite earlier panic over cheaper rivals like China’s DeepSeek, Nvidia’s biggest customersAmazon (NASDAQ:AMZN), Meta (NASDAQ:META), Alphabet (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT)aren’t letting up. Together, they’re on track to pour around $350 billion into infrastructure next fiscal year, up from $310 billion. Over 40% of Nvidia’s revenue comes from these players, and most of that is flowing into its AI computing systems.
Wall Street’s starting to catch up. Loop Capital’s Ananda Baruah just lifted his price target from $175 to $250implying a $6 trillion market value. His thesis? AI capex could hit $2 trillion annually by 2028. Baruah points to Nvidia’s dominant grip on high-end AI hardware as reason to stay bullish, with margin control and pricing power acting as tailwinds. Longtime bull Aziz Hamzaogullari at Loomis Sayles says Nvidia is still uniquely positioned, even if there will be occasional bumps in spending cycles. He sees this moment as a structural shiftand Nvidia as one of the few firms with the keys to the kingdom.
Still, the story isn’t risk-free. Nvidia relies on Taiwan Semiconductor Manufacturing (NYSE:TSM) for chip production, leaving it exposed to geopolitical swings and potential tariff shocks, especially with Trump’s 90-day tariff pause ending soon. And while the current AI boom favors Nvidia, many of its largest customers are quietly building in-house chips to cut costs. As Polen Capital’s Dan Davidowitz put it, the valuation case hinges on very robust assumptions, especially if customers start reallocating budgets away from Nvidia’s premium gear. For now, though, the trend remains: AI spending is acceleratingand Nvidia’s at the center of the storm.
This article first appeared on GuruFocus.