Increased capital expenditures on data centers by hyperscale cloud computing companies is a positive sign for Nvidia (NVDA) stock and others, analysts say.
"Robust capex trends at major hyperscalers continue, with all four U.S. hyperscalers raising calendar 2025 outlook significantly," BofA Securities analyst Vivek Arya said in a client note.
He expects AI chip leader Nvidia to post a "healthy beat-and-raise" report when it releases fiscal second-quarter results on Aug. 27.
Arya reiterated his buy rating on Nvidia stock with a price target of 220.
Amazon.com (AMZN), Facebook parent Meta Platforms (META), Google parent Alphabet (GOOGL) and Microsoft (MSFT) each upped their data center capex with their June-quarter reports.
The heightened data center spending to support artificial intelligence applications is positive for Nvidia and other tech suppliers, Mizuho Securities analyst Vijay Rakesh said in a client note. In addition to Nvidia stock, he expects the spending wave to boost Broadcom (AVGO), Credo Technology (CRDO), Dell Technologies (DELL) and Micron Technology (MU).
Data center capex among the four hyperscalers is now expected to rise 51% year over year in 2025, Rakesh said. Before the Q2 reports, spending was seen rising 38%.
In morning trades on the stock market today, Nvidia stock advanced more than 2% to 177.34.
Global cloud computing capex is tracking to $445 billion this year, up 56% from 2024, Morgan Stanley analyst Erik Woodring said in a client note Monday. That's up from 44% growth expected just two weeks ago, he said.
Further, data center capex is seen rising 16% in 2026 to $518 billion. Morgan Stanley's figures are based on spending by the 11 largest global hyperscalers, Woodring said.
Evercore ISI analyst Amit Daryanani said the U.S. hyperscaler capex increases are most positive for tech suppliers Arista Networks (ANET), Ciena (CIEN) and Vertiv (VRT).
Nvidia stock is on five IBD lists: IBD 50, Big Cap 20, Leaderboard, Sector Leaders and Tech Leaders.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
YOU MAY ALSO LIKE:
Spotify Stock Rises As Music Streamer Raises Prices In International Markets
Apple Gets Points For Good Behavior But Still In Investor Jail
AI Data Center Buildout Fueling Growth At Vertiv, Applied Digital
Find Winning Stocks With MarketSurge Pattern Recognition & Custom Screens
Join IBD Live For Stock Ideas Each Morning Before The Open
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.