The Trump administration's "AI Action Plan" and Google's increased data center spending are likely to buoy Nvidia and other AI chip stocks, analysts say.
On Wednesday, President Donald Trump unveiled his plan to ensure that the U.S. leads the world in artificial intelligence technology. The initiative, called "Winning the AI Race: America's AI Action Plan," lists over 90 federal policy actions.
Trump's AI plan includes expediting permits for building data centers and semiconductor fabs, initiatives to increase high-demand occupations, and coordinating exports of full-stack AI packages to U.S. allies.
"This reads positively for compute/GPU suppliers," UBS analyst Timothy Arcuri said in a client note.
Trump's initiative could signal an eventual lifting of the ceiling on compute power allowed to be shipped to China, he said. That would enable chip vendors like Nvidia and Advanced Micro Devices to grab a larger slice of the $50 billion AI accelerator market in China, Arcuri said.
Also Wednesday, Alphabet announced increased investments in its Google data centers to run AI applications. The internet giant raised its capital expenditures guidance for 2025 to $85 billion from $75 billion and said it expects a further increase in 2026. Last year, Google spent $53 billion in capex, up 63% from the previous year.
Alphabet disclosed the increased capex plans as it delivered better-than-expected second-quarter results.
"Alphabet's strong results will likely ripple to other corners of the AI ecosystem with strong demand for their AI suite standing to benefit companies like Nvidia and Broadcom," Jake Behan, head of capital markets for Direxion, said in a client note.
Nvidia Stock Advances On News
On the stock market today, Nvidia stock rose 1.7% to close at 173.74. Nvidia is trading just below its all-time high of 174.25 reached last Friday. Nvidia makes general-purpose AI chips called graphics processing units, or GPUs, with the Blackwell series its latest.
Meanwhile, Broadcom stock climbed 1.8% to close at 288.71 on Thursday. Earlier in the session, it notched a record high of 291.20. Broadcom designs custom AI chips, known as application-specific integrated circuits, for Google and Meta Platforms.
Google's big increase in capex is "great" for Nvidia and Broadcom, Melius Research analyst Ben Reitzes said in a client note Thursday.
"The increase in the full-year capex guide reflects even more investments in servers, but also data center construction in order to meet cloud customer demand," he said.
Alphabet's Google Cloud Platform "is still capacity constrained after recording strong growth in Q2, and we expect strong growth in second-half 2025 as more capacity comes online and it ramps its installations of TPUs (Tensor Processing Units from Broadcom) and (Nvidia) Blackwells," Reitzes said.
AI Chip Stocks On The Move
Other AI chip stocks moving higher on the White House and Google news included AMD, Astera Labs and Credo Technology.
AMD competes with Nvidia in making GPUs for AI applications. Astera and Credo make chips for high-speed connectivity and networking in AI data centers.
On Thursday, AMD stock rose 2.2% to close at 162.12. Astera advanced 1.8% to 121.68. And Credo jumped 2.8% to 101.17.
Nvidia stock is on four IBD lists: IBD 50, Leaderboard, Sector Leaders and Tech Leaders. Broadcom is on two IBD lists: Leaderboard and Tech Leaders.
AMD stock also is on two lists: Big Cap 20 and Tech Leaders. Astera Labs is on the IBD 50 list. And Credo is on Tech Leaders.
The next catalyst for AI chip stocks is likely to be capex reports from hyperscale cloud computing providers Amazon.com and Microsoft. Amazon is due to report its second-quarter results on July 31. Microsoft will release its fiscal fourth-quarter report on Wednesday.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
