Markets have had about a month to digest the DeepSeek revelations, and investors appear satisfied that Nvidia Corporation (NASDAQ:NVDA) will emerge on the other side of these new developments safe and sound.
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Indeed, shares have been recovering nicely, having climbed by double digits following the initial shock and awe. It seems that fears of decreasing capex spending on AI infrastructure – which would likely impact NVDA’s revenues and margins – are not coming to fruition, as hyperscalers remain committed to building out AI infrastructure.
Alphabet has announced $75 billion in capex spending in 2025, for instance, while Meta’s AI capex budget will be in the range of $60 to $65 billion this year.
Investor Michael Del Monte believes that this spending – and Nvidia’s growth trajectory – will not be slowing down anytime soon.
“As for building a case for investing in Nvidia, not a single hyperscaler reduced its capital outlay for compute and data centers,” explains the 5-star investor.
Del Monte further specifies that there are two main takeaways from the recent developments in the AI space, both of which should support further growth for Nvidia.
For starters, the investor notes that the industry is in the “model optimization” phase, one that is focusing on greater efficiencies and optimization. Many view the DeepSeek models as the next phase in AI inferencing.
“I expect that the emergence of these models will ignite the necessity of domestic AI developers to accelerate growth and development to maintain their leadership in AI,” the investor details.
Secondly, the investor points out that more AI data centers are needed to meet enterprise demand. Del Monte cites the massive capex spending as evidence that hyperscalers believe this to be the case as well.
In fact, for the current year, Del Monte is estimating that capital outlays will increase by almost 40% on a year-over-year basis to reach $313 billion. The investor is also predicting that growth will normalize at these levels in the years that follow.
Just up ahead, the investor spotlights Nvidia’s upcoming print scheduled for next week on February 26. Needless to say, Del Monte is expecting a robust performance.
“Nvidia’s q4’25 earnings have a strong potential to outperform driven by strong data center growth and hyperscalers’ continued investment in compute capacity,” notes Del Monte, who is rating Nvidia a Buy. (To watch Del Monte’s track record, click here)
Wall Street feels just as strongly about Nvidia. With 37 Buy and 3 Hold ratings, NVDA enjoys a consensus Strong Buy rating. Its 12-month average price target of $179.03 would lead to gains approaching 30% in the year ahead. (See NVDA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
