Nvidia’s stock surged over 4% on Wednesday, rebounding from last week’s sell-off as concerns over China’s DeepSeek AI model failed to dampen Big Tech’s spending on artificial intelligence infrastructure. The stock’s rise follows Alphabet’s announcement of a planned $75 billion capital expenditure in 2025, well above Wall Street’s expectation of $57.9 billion. Investor fears had been triggered by speculation that companies might reduce spending on Nvidia’s AI chips in favor of more cost-efficient alternatives such as DeepSeek.
However, major technology firms, including Alphabet, Meta, and Microsoft, continue to allocate substantial budgets for AI and data center investments. According to leading media outlets, the three companies are set to spend a cumulative $228 billion in capital expenditures in 2025, a 55% increase from 2024. Fundstrat’s head of research, Tom Lee, emphasized that Alphabet’s spending increase underscores the sustained demand for AI and data center expansion, despite concerns over emerging competition.
Nvidia, a key supplier of AI chips to Alphabet, saw its stock price climb as confidence in its market position remained strong. Bank of America analyst Vivek Arya reaffirmed his Buy rating on Nvidia, setting a price target of $190 per share. In a note to clients, Arya highlighted that spending on cloud infrastructure remains robust, with no signs of major Nvidia customers, including Microsoft and Meta, shifting their investments away from the company’s AI platforms.
While Nvidia benefited from the renewed optimism in AI-related expenditures, its competitor Advanced Micro Devices (AMD) saw a 7% decline in share value. AMD investors reacted to a weaker-than-expected outlook for the company’s data center business, leading to concerns about near-term performance. However, analysts remain positive on AMD’s long-term prospects. Stifel’s applied technology analyst Ruben Roy noted that while AMD faces short-term headwinds, demand for AI infrastructure continues to rise.
He emphasized that the AI investment cycle remains strong and that both Nvidia and AMD stand to benefit from the ongoing expansion of hyperscale data centers. Despite growing competition in the AI chip sector, Nvidia remains the dominant player in high-performance computing. With Big Tech reaffirming its commitment to AI spending, Nvidia appears well-positioned to capitalize on the increasing demand for its technology throughout 2025. – By MENA Newswire News Desk.