Nvidia Shares Hit Record High, Market Cap Tops $526 Trillion, How Much Higher Can It Go Amid AI Capex Boom?

NVIDIA's sustained strength in this rally is primarily supported by renewed heating of expectations for AI capital expenditures. What the market is more concerned about now is not whether the AI story is still intact, but whether large tech companies will continue to ramp up their capital spending.

This week, Microsoft ( MSFT ), Google ( GOOGL ), Meta and Amazon ( AMZN) will all release earnings reports, and their capital expenditure guidance will directly influence market judgment of NVIDIA's subsequent orders.

Barron's mentioned that investors are focusing on how much these companies plan to invest in AI chips; Matt Britzman also believes the market may be underestimating the sustainability of NVIDIA's profitability, especially its resilience extending beyond 2027.

Meanwhile, TSMC ( TSM) recently raised its full-year revenue forecast and increased its capital expenditure guidance to the upper end of its original range, while emphasizing that AI demand is extremely strong. TSMC's robust outlook indicates that demand in the AI field remains highly buoyant, with related capital expenditures continuing to expand, industry growth momentum showing no signs of waning, and the cycle remaining in an upward phase.

Analysts believe that for AI chip companies like NVIDIA, AMD, and Broadcom, market demand remains strong, with no evidence yet that AI spending has peaked. NVIDIA's stock reaching a new high reflects market confidence that investment in computing power is continuing to expand.

Notably, as NVIDIA hits a new all-time high, market funds are rotating from broad tech stocks back into semiconductors.

On April 24, Intel's unexpectedly strong revenue guidance drove the Philadelphia Semiconductor Index to a new record; the index has gained 46.94% year-to-date, and NVIDIA's return to record highs this week reinforces the characteristic of chips leading this market rally.

This shift in capital preference also explains why NVIDIA was able to break out again after its previous period of consolidation. Earlier, the market had doubts about AI returns on investment, tariffs, and geopolitical risks, and NVIDIA was even momentarily suppressed to a relatively undervalued position; however, as earnings confirmed that demand persists, capital has become willing once again to pay a premium for high-certainty AI assets.

Currently, the most direct risk is that market expectations for AI capital expenditures are too high. Microsoft, Google, Meta, and Amazon are set to release their earnings reports this Wednesday, and if any of these companies provides conservative guidance on AI capital spending, it could put pressure on Nvidia's stock price.

Recent market trends indicate that tech giants' AI spending plans for 2026 have cumulatively exceeded $600 billion, with the market focusing on whether these investments can eventually translate into profits.

According to Wolfe Research, only about 19% of companies currently utilize AI in the production of products or services, suggesting that widespread commercial penetration is still in its early stages, with profit realization primarily concentrated in a few technology and financial firms. This implies that the current market rally relies heavily on the capital expenditures and performance of a few leading companies; should their earnings commentary turn slightly conservative, market sentiment could cool rapidly.

Furthermore, an additional layer of risk stems from the valuation narrative itself. With Nvidia's stock price at record highs and its market capitalization ranking first globally, the market's expectations are naturally elevated. While Nvidia continues to benefit from AI chip demand, supply chain bottlenecks, TSMC capacity constraints, and export restrictions in the Chinese market will all affect its growth pace. In particular, policy uncertainty persists regarding its China business; if progress on export licenses falls short of expectations, Nvidia's marginal growth elasticity could be constrained.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.