Nvidia (NVDA) stock climbed 2.5% on Thursday, leading semiconductor stocks higher after tech giants Meta Platforms (META) and Microsoft (MSFT) reaffirmed their commitment to aggressive artificial intelligence investments.

Meta raised its 2025 capital expenditure forecast to $68 billion (at the midpoint), up from its previous range of $60 billion to $65 billion, citing “additional data center investments” for AI and increased hardware costs. 

Meanwhile, Microsoft executives maintained their $80 billion data center expansion plans, with CFO Amy Hood emphasizing the company remains “committed to investing against the strong demand signals” the company is seeing.

Other chip stocks benefited from the positive sentiment, with Broadcom (AVGO) rising 2.5% and memory maker Micron Technology (MU) gaining 1%. Advanced Micro Devices (AMD) initially jumped 2.8% before reversing course to close lower.

The gains come amid recent investor concerns about potential pullbacks in AI infrastructure spending. Microsoft had reportedly canceled some data center projects, while investors broadly question when Big Tech’s massive AI investments will translate into substantial revenue.

According to investment firm DA Davidson, Microsoft and Meta are critical customers for Nvidia. In the last 12 months, they contributed an estimated $20 billion and $9 billion, respectively, to the chipmaker’s revenue.

Despite Thursday’s gains, NVDA stock is down 25% below all-time highs, trailing the S&P 500 Index ($SPX), which is down 8.9%. The chip stock faces headwinds from trade restrictions under President Donald Trump that could impact its overseas business, particularly in China.

CEO Jensen Huang visited Washington on Wednesday, urging policymakers to “accelerate the diffusion of American AI technology around the world” amid reports that the Trump administration may implement more restrictive AI export controls.

Let’s see if you should own Nvidia stock at the current valuation. 

Is Nvidia Stock a Buy Right Now?

Nvidia continues to cement its position as the cornerstone of global AI infrastructure, with CEO Jensen Huang highlighting three key focus areas: cloud data centers, enterprise IT, and robotics systems. 

Far from seeing competition slow its momentum, Huang dismisses concerns about technologies like DeepSeek’s R1, emphasizing that reasoning-based AI actually requires exponentially more computing power, potentially 100x greater than previous models.

The company’s Blackwell platform, offering 40x performance improvement over Hopper, has already secured massive preorders from hyperscalers. Huang revealed the top four cloud service providers have ordered 3.6 million Blackwell GPUs, with demand far exceeding this figure. This contradicts rumors of AI investment slowdowns or project cancellations.

Huang articulated a compelling vision of “AI factories” as dedicated infrastructure separate from traditional data centers, representing additional market opportunity. He emphasized that every industry will require AI factories — from automotive companies like General Motors (GM) to retail chains building intelligence for physical stores.

On competition from custom application specific integrated circuits (ASICs), Huang projected confidence in Nvidia’s comprehensive ecosystem spanning chips, networking, storage, and software. He argued that when building multibillion-dollar AI infrastructure, customers need certainty that only Nvidia can provide, with unmatched technical depth and roadmap visibility.

While temporary margin pressures exist due to Blackwell’s architectural transition, Huang expressed confidence that these would improve as production scales and the platform matures over its 3-4 year lifecycle. He highlighted Nvidia GPU’s industry-leading lifecycle, lasting 3-4 years longer than competitors, improving total ownership cost.

What Is the Target Price for NVDA Stock?

Nvidia’s growth story is far from over given it is forecast to increase sales from $130.5 billion in fiscal 2025 (ended in January) to $289 billion in fiscal 2028. In this period, its adjusted earnings are forecast to expand from $2.99 per share to $6.53 per share. 

Today, NVDA stock trades at a forward price-earnings multiple of 25.3x, below its 10-year average of 37.6x. If the tech stock trades at 25x forward earnings, it will be priced at $163 per share in early 2027, indicating upside of roughly 50% from current levels. 

Out of the 44 analysts covering NVDA stock, 37 recommend “Strong Buy,” two recommend “Moderate Buy,” four recommend “Hold,” and one recommends “Strong Sell.” The average target price for NVDA stock is $166.