This year, good news has been scarce for investors in Nvidia (stock code: NVDA). As of the time of writing this article, although the tech giant’s solid financial report released in February not only exceeded market expectations but also showed a bright future, its share price still dropped by 15% in 2025.
Analysis of the Reasons for NVIDIA’s Stock Price Correction
The decline in Nvidia’s stock price was caused by factors beyond the company’s control. The possible impact of President Trump’s new tariffs and the export controls faced by the company’s chip sales have both weakened investors’ confidence in its stocks. Furthermore, Wall Street is also concerned that the growth rate of spending on artificial intelligence (AI) hardware might slow down.
However, a closer look at the recent developments in the field of artificial intelligence reveals that the decline in Nvidia’s stock price this year seems to lack sufficient basis. Meta Platforms (stock code: META), one of NVIDIA’s major clients, has recently released quarterly financial reports suggesting that good days may be coming for this chipmaker.
Meta’s significant investment in AI infrastructure is beneficial to NVIDIA
Meta Platforms released its first-quarter financial report on April 30th. The performance of this social media giant far exceeded the market’s general expectations. Its investment in the field of artificial intelligence has helped it win a larger share from advertisers and also increased the user engagement of its applications. Meta’s management pointed out that due to more precise audience targeting and improved conversion rates, the adoption rate of its artificial intelligence advertising tools is on the rise.
What is more worth mentioning is that Meta claims that artificial intelligence has the potential to enhance productivity in the advertising industry. Therefore, CEO Mark Zuckerberg believes that “the productivity boost brought by artificial intelligence will significantly increase the share of advertising in the global gross domestic product (GDP) compared to the current level.” Furthermore, the management expects that the revenue of generative artificial intelligence will increase significantly in the next ten years.
According to TechCrunch, Meta expects its generative artificial intelligence revenue to reach between 460 billion and 1.4 trillion US dollars by 2035. This represents a huge leap compared with the $2 billion to $3 billion in revenue that the company expects to obtain from this technology in 2025. Given that Meta’s revenue has reached 170 billion US dollars in the past 12 months, the above potential opportunities indicate that its revenue is expected to increase significantly in the next 10 years.
This also explains why Meta has decided to further increase its capital expenditure this year. The management currently expects that the company’s capital expenditure in 2025 will be between 64 billion and 72 billion US dollars, while the previously projected capital expenditure for 2025 was between 60 billion and 65 billion US dollars. Meta’s updated capital expenditure forecast indicates that spending will increase by 73% compared to 2024.
In the latest earnings call, Zuckerberg clearly explained the reasons for the company’s increased capital expenditure. He said, “This updated forecast reflects the increased investment in data centers to support our artificial intelligence efforts, as well as the expected rise in the cost of infrastructure hardware.”
There are two reasons why this statement is important. Firstly, as artificial intelligence technology has brought profits to advertisers, Meta will continue to invest in AI hardware, which is also the reason why advertisers are willing to put more money into their applications. For instance, the average price of each advertisement at Meta has risen by 10% year-on-year, exceeding the 6% increase in the same period last year. Secondly, although infrastructure costs may rise due to the uncertainties brought about by the tariff war, Meta still plans to continue purchasing artificial intelligence hardware. This indicates that any potential increase in the cost of purchasing artificial intelligence hardware is expected to be offset by the benefits expected to be brought by this technology. Even though the new tariffs have led to an increase in the price of NVIDIA chips, Meta seems willing to invest more money in purchasing them.
With multiple investments, NVIDIA is expected to rebound
It is not only Meta that will invest heavily in artificial intelligence infrastructure. Alphabet, the parent company of Google, reaffirmed its capital expenditure forecast of 75 billion US dollars for this year, and Microsoft will also increase its spending in fiscal year 2026. Meanwhile, large-scale artificial intelligence infrastructure projects like Stargate are also advancing, and the investment in this project could reach as high as 500 billion US dollars in the next four years.
As part of the Stargate project, the deployment of NVIDIA chips has already begun. The company may reap huge profits from the huge investment in this project. In addition, NVIDIA’s foundry partner, TSMC, also stated that the demand for artificial intelligence chips will remain strong in 2025, and the revenue from such products is expected to double.
Nvidia seems to have all the elements in place to release another outstanding quarterly financial report on May 28th, which should help investors regain confidence in this artificial intelligence stock. In view of this, astute investors can start buying the company’s stocks before the upcoming financial report. Currently, the expected price-earnings ratio of its stocks is 26 times, which is quite attractive.
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