Nvidia's market capitalization increased by $70 billion on Monday as it approaches an all-time high driven by customer spending on AI

Nvidia's market capitalization increased by $70 billion on Monday as it approaches an all-time high driven by customer spending on AI

Analysts predict that this year's capital expenditure outlay from Nvidia's largest clients would surpass $200 billion.

GPU chip made by Nvidia Blackwell. David Paul Morris/Bloomberg is the photographer.

A significant capital expenditure from its key clients and the expectation of solid profits later this month have propelled Nvidia's shares back to their all-time highs set in March of this year.

Since the April 19 low, Nvidia shares have increased by 20%; nonetheless, they are now just 3% below the top from March. On Monday, Nvidia's market value increased by nearly $70 billion as it concluded the day 3.6% higher.

Top Nvidia clients including Microsoft, Amazon, Alphabet, and Meta Inc. have all detailed long-term capital spending intentions in their corresponding earnings calls. Shares based on artificial intelligence (AI) are predicted to remain appealing as capital investment from companies like Microsoft, Alphabet, Meta, and Amazon is predicted to surpass $200 billion this year, surpassing the previous projection, according to Solita Marcelli, CIO of Americas at UBS Financial Services, who spoke with Bloomberg.

"So, if you look at revenue, the data center category had roughly 25 billion a year ago, and today it has 100 billion. Thus, the rise has essentially merely been in line with the rise in income... Therefore, we think there is still a lot of room for these profits to rise based on our research and the firms we engage with throughout the value chain, Spear Invest's founder and CIO, Ivana Delevska, told Reuters on May 7.

Following its low on April 19, the market value of the S&P 500 has now reached $2 trillion, with the 'Magnificent Seven' technology firms accounting for half of this total (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Tesla). The S&P 500 had its largest three-day surge since November on Monday as well.

"We see a lot of upside forward driven by many factors, including AI," Delevska told Reuters, implying that the major technology stocks will continue to do well in 2024. "The 'Magnificent 7' have been doing pretty well this year, alongside part of the reason is because we as a species are at the bottom of the technology cycle."