Increased capital expenditures on data centers by hyperscale cloud computing companies is a positive sign for Nvidia 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, Facebook parent Meta Platforms, Google parent Alphabet and Microsoft 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, Credo Technology, Dell Technologies and Micron Technology.
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%.
Nvidia Stock Rises
On the stock market today, Nvidia stock advanced 3.6% to close at 180.
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, Ciena and Vertiv.
Nvidia stock is on five IBD lists: IBD 50, Big Cap 20, Leaderboard, Sector Leaders and Tech Leaders.
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