Nvidia rises after signaling longer AI spending runway

On Thursday, Nvidia sent shockwaves through the chip-stock market with an unprecedented forward revenue projection that effectively quelled investor worries about the AI boom's sustainability. Shares of the chip giant surged by 6.8%, propelling the company's market value to an additional $295.7 billion and marking its most significant single-day gain since June 1, if the momentum persists.

Despite soaring over 1,000% over three years to claim the title of the world's most valuable company, Nvidia has underperformed its rivals in 2026, with a modest 12% increase, owing to apprehensions over Big Tech's data-center expenditures and its own contribution to the overheated AI valuations by backing certain firms that are its customers.

Customers like OpenAI's attempts to craft in-house chips as alternatives to Nvidia's expensive and supply-constrained processors have exacerbated the pressure.

To alleviate these concerns, Nvidia announced on Wednesday a remarkable 70% increase in next fiscal year's revenue, an uncommon move for a firm typically only anticipating quarterly projections. This forecast affirmed that the AI expansion would proceed unabated, and Nvidia would continue to reap substantial benefits from this spending.

Ipek Ozkardeskaya, an analyst at Swissquote, remarked, "It's impossible for investors to ignore this company: it is growing rapidly, and it is incredibly profitable. This is not a fantasy; this is reality."

The AI-linked chip stocks joined the rally, with Intel, Micron, Broadcom, and U.S.-listed shares of South Korea's SK Hynix climbing between 1.3% and 3.5% after technology stocks ascended in both Asian and European markets. Even AI cloud computing companies such as CoreWeave and Nebula, which are backed by Nvidia and increasingly recognized as vital to its operations, rose between 2% and 4.5%.

At least 16 brokerages boosted their price targets on Nvidia's stock, given the robust demand for its next-generation Rubin AI processors, according to LSEG data. However, Nvidia continues to trade at a lower multiple compared to its competitors, with a forward price-to-earnings ratio of 17.9, considerably lower than Advanced Micro Devices' 37.2 times and Intel's 46.2 times.