Nvidia Shares Surge on Strong Demand for AI Chips

Shares of Nvidia (NASDAQ: NVDA) rose sharply on Thursday, increasing by as much as 5.5%. By 11:59 a.m. ET, the stock was still up 4.4%. A series of developments have suggested that demand for the company’s processors is likely to remain strong.

Strong Fiscal Results Drive Interest in AI

Microsoft (NASDAQ: MSFT) reported its fiscal 2025 third-quarter financial results after market close on Wednesday, delivering robust figures that pleased investors. Revenue reached $70 billion, a 13% increase year over year, while diluted earnings per share (EPS) rose 18% to $3.46. Analysts had forecasted revenue of $68.4 billion and EPS of $3.20, marking a significant beat on expectations.

The company attributed its impressive growth to increasing demand for its cloud services and AI technologies. CEO Satya Nadella also eased concerns about reduced spending on data centers, which would have negatively impacted Nvidia.

Meanwhile, Meta Platforms (NASDAQ: META) reported first-quarter revenue of $42.3 billion, a 16% increase that led to an EPS of $6.43, up 37% from the previous year. These results surpassed Wall Street’s expectations of $41.27 billion in revenue and $5.22 in EPS.

Notably, Meta increased its 2025 capital expenditures (capex) range from $60-65 billion to $64-72 billion, with a significant focus on AI, mentioned 78 times in the company’s conference call. With Nvidia being the primary supplier of graphics processing units (GPUs) required for AI and data center growth, this increased investment benefits Nvidia considerably.

CEO’s Vision Sparks Anticipation

Nvidia CEO Jensen Huang further fueled excitement during an interview with The Wall Street Journal, stating that American companies need to adopt AI “factories” to stay competitive. These virtual factories will continuously produce AI models tailored for specific functions, acting as the “engine” for AI development.

Positive Indicators for Nvidia’s Future

While there have been concerns regarding a slowdown in AI adoption, recent developments indicate a sustained growth trajectory. Moreover, trading at less than 26 times forward sales, Nvidia appears to be an attractive investment opportunity in the AI sector.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.