What happened
Investors were optimistic about Nvidia (NVDA 0.74%) today, likely after Meta Platforms said on its recent quarterly-earnings call that it is increasing its capital expenditures on artificial intelligence (AI) infrastructure, which could benefit Nvidia.
As a result, the semiconductor stock climbed 2.9% as of 2:34 p.m. ET.
So what
While Meta's recent quarterly results weighted down on its stock, management's comments about investing in AI data centers helped give Nvidia's shares a boost today.
Image source: Getty Images.
Meta's chief financial officer, Dave Wehner, said on the company's third-quarter earnings call yesterday:
For 2023, we expect capital expenditures to be in the range between $34 billion to $39 billion, driven by our investments in data centers, servers, and network infrastructure. An increase in AI capacity is substantially all our capital expenditure growth in 2023.
Meta is an important customer for Nvidia. Back in January, the two companies announced that they were working together to build a massive AI supercomputer using Nvidia's data-center infrastructure.
Data-center sales are Nvidia's largest revenue segment and in the most recent quarter, its data-center revenue increased 61% to $3.8 billion.
NASDAQ: NVDA
Key Data Points
Now what
Investors will get a better picture of how Nvidia is doing when the company reports its third-quarter financial results next month. It's worth mentioning that Meta's increase in AI spending may not be seen in Nvidia's quarterly results until a few quarters from now. How much it will impact Nvidia's revenue is still unknown.
Aside from the Meta spending increase, investors are still trying to figure out how strong the U.S. economy is right now, and they got some positive news today that could be lifting Nvidia's shares higher as well.
The U.S. gross domestic product (GDP) grew by 2.6% in the third quarter, which was higher than economists' consensus estimate of 2.3% growth.
That good news, paired with Meta's focus on AI spending, is likely sending Nvidia's stock higher today and reversing some investors' worries about a potential recession.
