Nvidia nears all-time high riding on AI spend from clients, adds $70 billion to market cap on Monday

Shares of Nvidia are racing back to its all-time highs it clocked in March earlier this year, riding on the back on strong capital expenditure from its major customers and in anticipation of strong earnings later this month.

Nvidia shares have rebounded since the low of April 19, up 20% since then and is now short of the March peak by about 3 percent. Nvidia ended higher by 3.6% on Monday, adding over $70 billion in market capitalization.

Nvidia’s top customers like Meta Inc, Microsoft, Amazon and Alphabet have all laid out sustained plans of capital expenditures in their respective earnings calls. CIO of Americas at UBS Financial Services, Solita Marcelli told Bloomberg shares that are a play on AI computing are expected to stay attractive as capital expenditure from Microsoft, Alphabet, Meta and Amazon is expected to cross $200 billion this year, higher than a previous estimate.

"So if you look at revenue a year ago was about 25 billion for the data center segment and now that's 100 billion. So the run up has really just been commensurate with the increase in earnings... So we believe based on our research and the companies we speak to across the value chain that there is still a lot of opportunity for these earnings to go higher", Ivana Delevska founder and CIO of Spear Invest told Reuters on May 7.

The S&P 500 has now $2 trillion in market capitalization since the April 19 low, half of which has come the 'Magnificent Seven' technology stocks (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Tesla). Monday also marked the best three-day rally since November for S$P 500.