Nvidia (NVDA) Stock: Tech Giants Keep Spending Big on AI as Huawei Enters the Chat

TLDR:

Amazon reported $24.3 billion in Q1 capital expenditure, largely for AI infrastructure Nvidia shares rose 0.8% in premarket trading following Amazon’s earnings report CEO Jensen Huang met with U.S. lawmakers to discuss Huawei’s growing AI capabilities Concerns exist about export restrictions pushing clients from Nvidia to competitors like Huawei Wall Street maintains a Strong Buy consensus on Nvidia with an average price target of $165.22

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Nvidia’s stock saw positive movement following Amazon’s earnings report, which revealed continued heavy spending on AI infrastructure. At the same time, CEO Jensen Huang met with U.S. lawmakers to address concerns about growing competition from Chinese tech giant Huawei.

Amazon reported first-quarter capital expenditure of $24.3 billion, up from $13.9 billion in the same period last year. This keeps the company on track for its planned $100 billion in spending this year.

NVIDIA Corporation (NVDA)

The majority of Amazon’s capital expenditure relates to Amazon Web Services (AWS). The company is investing to support demand for AI services and increasingly in custom silicon like Trainium.

Despite Amazon’s reference to in-house chips, the continued pace of spending appears favorable for Nvidia. This follows similar commitments from Microsoft and Meta Platforms, which both indicated they would continue investing heavily in AI data centers.

Nvidia shares rose 0.8% to $112.51 in premarket trading on Friday. The stock had already gained 2.5% in Thursday’s trading session.

Huawei Competition Concerns

Jensen Huang, Nvidia’s CEO, met with the U.S. House of Representatives Foreign Affairs Committee on Thursday. During this closed-door meeting, Huang discussed the emerging threat from Huawei’s AI offerings.

The meeting highlighted concerns about how restrictions on Nvidia’s chips in China could potentially increase competition from Huawei. This comes as multiple reports have raised worries about Huawei’s growing capabilities.

Last month, Reuters reported that Huawei plans to begin mass shipments of its advanced 910C AI chip to Chinese customers as early as May. The Wall Street Journal also reported that Huawei has asked some Chinese tech companies to test its new Ascend 910D AI chip.

Nvidia spokesperson John Rizzo stated that Huang met with the committee to discuss the “strategic importance of AI as national infrastructure and the need to invest in U.S. manufacturing.” Huang reaffirmed Nvidia’s complete support for government efforts to promote American technology.

Market Position and Outlook

Nvidia’s GPUs have seen surging demand as they are required to build and train AI models. However, the company faces pressure from potential additional chip export restrictions by the Trump administration.

Nvidia previously designed chips specifically for the Chinese market to comply with export controls implemented during Trump’s first term. Last month, the company revealed that the Trump administration had asked it to stop selling H20 chips to China despite rising demand for these chips to build low-cost AI models.

There are concerns that stricter rules might push clients away from Nvidia toward rivals like Huawei. Despite these challenges, Wall Street maintains a Strong Buy consensus rating on Nvidia stock.

The Strong Buy rating is based on 35 Buys, five Holds, and one Sell recommendation. The average price target for Nvidia stock is $165.22, implying a 48% upside potential from current levels.

Other chip makers also saw positive movement, with Advanced Micro Devices up 0.7% and Broadcom up 0.9% in premarket trading on Friday.

The continued AI infrastructure spending by major tech companies like Amazon reinforces the strong demand for high-performance chips needed for AI development and deployment.

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