Nvidia Stock Rebounds Above $200 as Cloud Spending Supports Growth
Nvidia's stock has rebounded above $200 after falling below it last week due to concerns about AI valuations and investment cycle sustainability. The recovery is supported by stronger earnings from Microsoft and Palantir, which have restored confidence in cloud infrastructure spending. This growth is crucial for Nvidia as demand for its advanced accelerators remains tied to the massive data-center buildout underway across major technology companies.
However, the stock still faces resistance around $210, making this level a key test for whether the recent rebound can develop into a renewed uptrend. Microsoft's use of Nvidia's liquid-cooled Blackwell systems and Palantir's strong results indicate that hyperscalers are committed to AI infrastructure spending. Nonetheless, investors should be cautious about assuming that strong spending means the current investment boom can continue indefinitely.
The enormous scale of capital expenditure and questions surrounding returns have raised concerns about the sustainability of the AI investment cycle. Additionally, Nvidia's longer-term growth story is challenged by competition from custom AI chips developed by major cloud providers and the emergence of more efficient AI models. If AI developers achieve comparable performance using less computing infrastructure, the demand for hardware could decline, potentially reducing investors' long-term growth assumptions.