Nvidia is proof hyperscalers won't back off AI capex: Analyst

Nvidia's market cap crossed above $5 trillion on Wednesday morning, becoming the first company in history to reach such a valuation. This all comes after Nvidia CEO Jensen Huang delivered his keynote address at the GTC 2025 event (GPU Technology Conference) on Tuesday, showcasing the AI chipmaker's newest projects and partnerships.

Intelligent Alpha Founder and CEO Doug Clinton chats with Julie Hyman on Nvidia's growth, how the semiconductor manufacturer is "leading the charge" in AI infrastructure capex, and what he expects from other Big Tech giants' ramp up in AI spending.

To watch more expert insights and analysis on the latest market action, check out more Market Catalysts.

Video Transcript

00:00 Julie

Nvidia officially the first company to hit a $5 trillion market cap, the rally in shares after a slate of reveals at its GTC event, and on optimism for its Blackwell sales to China or potential sales. For more let's bring in Doug Clinton, intelligent Alpha founder and CEO. Doug, it's great to see you as always. What do you make of this latest leg up in Nvidia at a time where there are all these questions about an AI bubble. And here comes Nvidia like, well, let's let's take another leg up here.

00:46 Doug Clinton

That's usually how it happens, Julie. As as funny as that is to say, when everybody starts talking about, hey, are we in a bubble, uh I think counterintuitively markets usually do the things that people don't expect and that is they just keep going up. and Nvidia is leading the charge. I think that what we're seeing with Nvidia is the reality that none of the hyperscalers are going to stop spending on CAPEX, building out the AI infrastructure that we've seen over the past year plus now.

01:25 Doug Clinton

And I think that that's just being factored into Nvidia. The reality is that numbers will probably continue to go up from Nvidia. There's this catalyst maybe with China, maybe China gets opened up for Blackwell and that could be additional upside, but it just feels like all things are kind of going right for Nvidia right now and the AI trade more broadly.

01:50 Julie

I mean, the Blackwell question is is a may is indeed a maybe right now. We don't know if uh they're China and the US are going to come to an agreement on that. So how pivotal is Nvidia, um how pivotal is that for Nvidia? I mean, the shares had already been pushing up towards a record even without that news.

02:18 Doug Clinton

I think that it's probably not fully priced in. I mean if I had to put odds on Blackwell, just the full out, the GB 200, I think President Trump called it the super duper chip, kind of the high-end chip. I think it's probably 10 to 20% that that gets fully opened up at this point. And so if we did see that happen, I would imagine that Nvidia stock uh would probably go even higher. In the nearer term though, this week we will have earnings from several of the hyper scalers and I think we're going to hear continued commentary around them not slowing down in terms of their infrastructure builds. And maybe that's sort of what the market is pricing in now, just getting a little bit ahead of that positive commentary.

03:10 Julie

Do you think that there will be any acceleration in spend from here? or do you think it's more of I mean, they're already huge numbers to be fair. But do you think that it's it's a matter of maintaining that pace of spending?

03:26 Doug Clinton

I think some of the numbers are actually probably too low. If you look at the street CAPEX numbers for Google and Amazon in particular, the street's at 12 and 9% for next year and to put that into context, meta, the street's expecting about 40%. So I think something has to give and my gut is we'll probably see Google and uh Amazon talking about continuing to spend more. and I think those street numbers have to come up. It may not necessarily represent an acceleration, but I think it will represent a pretty strong continuation of what they've been doing.

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