Nvidia investors should watch $700 billion in AI capex, not the stock

Nvidia’s shares have risen just 6% so far this year, the weakest performance since 2022, after soaring 171% in 2024 and another 39% in 2025 [1]. While the modest gain frustrates many shareholders, the real driver of Nvidia’s outlook is the $700 billion capital‑expenditure commitment announced by fellow “Magnificent Seven” tech giants this year [1].

Alphabet, Microsoft, Amazon and Meta have collectively pledged up to $700 billion for data‑center and AI infrastructure projects in 2024 [1]. A sizable slice of that spending will flow to hardware—particularly GPUs, Nvidia’s core product. The company’s fourth‑quarter fiscal 2026 revenue jumped 73% year‑over‑year to $68.1 billion, with data‑center sales alone contributing $62.3 billion, a 75% increase [1]. CEO Jensen Huang attributes the surge to “customers racing to invest in AI compute,” underscoring how the capex wave fuels demand for Nvidia’s chips.

Beyond the current quarter, Nvidia’s pipeline remains robust. The firm rolled out its Hopper and Blackwell GPUs last year, and is set to launch the next‑generation Rubin chips this calendar year, promising higher performance and efficiency [1]. These innovations keep Nvidia at the forefront of AI hardware, but the forward price‑to‑earnings ratio of 23.9—well below its three‑year average of 79—suggests the market may still undervalue the company’s growth potential [1]. Huang even projected $1 trillion in AI revenue by calendar 2027, a stark contrast to the $215.9 billion recorded in 2025 [1].

The $700 billion capex figure, however, is not a guaranteed windfall. Only a portion will be spent on GPUs, and the broader spending includes land, cooling, and networking infrastructure [1]. Still, the sheer scale of the commitment signals a sustained appetite for AI compute capacity, which could keep Nvidia’s data‑center revenue expanding for years. Investors who focus solely on the modest 6% stock move may miss the longer‑term catalyst embedded in their customers’ spending plans.

If the “Magnificent Seven” maintain or accelerate their capex trajectory, Nvidia’s growth story could outpace the market’s current expectations, turning the $700 billion commitment into a decisive lever for future earnings. The key question remains: will the AI‑driven spending materialize at the projected levels, and how quickly will Nvidia capture the resulting hardware demand?