In a striking display of market confidence, Nvidia Corporation (NASDAQ: NVDA) witnessed its market valuation swell by approximately $177.6 billion on Wednesday, following SpaceX's announcement that it will rely exclusively on Nvidia's AI chips for its expanding computing infrastructure. The surge came even as the broader tech sector experienced a downturn, with the Nasdaq slipping 0.8%.
Shares of Nvidia ended the session at $219.22, a gain of 3.43%, marking its fifth consecutive day of advances. This rally builds on a strong week, with the stock climbing 15.4% over that period. The latest catalyst: SpaceX's declaration that it will deploy Nvidia's Vera Rubin AI computer, which CEO Elon Musk described as "the best AI computer," while confirming, "We're exclusive to Nvidia."
SpaceX, which trades under the ticker NASDAQ: SPCX, aims to exceed two gigawatts of computing capacity by the end of this year, with a longer-term goal of approaching 10 gigawatts by the end of 2027. Musk indicated that the figure could reach nearly 10 gigawatts, a scale that transforms what might be seen as a simple endorsement into a potential order of significant magnitude.
According to Wolfe Research analyst Chris Caso, Nvidia could generate roughly $35 billion in revenue for every gigawatt of installed capacity. If SpaceX's 10-gigawatt target materializes, this could translate into a hypothetical $350 billion in hardware sales, a figure that surpasses Nvidia's current annual Data Center revenue run rate of approximately $301 billion. However, no confirmed order exists, and the reports did not specify a contract amount or delivery timeline.
The market's reaction was not uniform across the AI chip sector. Advanced Micro Devices, Inc. (NASDAQ: AMD) saw its shares plummet 7.2% after projecting third-quarter revenue of about $13 billion, which, while beating consensus estimates of $12.52 billion, failed to meet the high expectations of investors. The relative swing between the two companies was stark: Nvidia's increase was 2.9 times larger than AMD's decline, totaling a $239 billion divergence.
Nvidia's recent performance has been underpinned by a robust earnings base. In the first quarter of fiscal year 2027, Data Center revenue reached $75.2 billion, accounting for roughly 92% of total sales. Company-wide revenue grew 85% year-over-year to $81.62 billion, with GAAP gross margin expanding to 74.9% and non-GAAP diluted EPS rising 140% to $1.87. Management projects second-quarter revenue of $91 billion, with a possible variation of 2% in either direction, though the outlook excludes any China Data Center compute revenue.
Wall Street remains overwhelmingly bullish on Nvidia, with consensus targets implying an upside of around 38% from Wednesday's close. MarketBeat lists 51 buy ratings and two holds, with a target range of $218 to $500, while MarketScreener shows 61 analysts with a similar average target. Caso noted that SpaceX's remarks suggest "some evidence that spending growth is likely to continue," citing the company's CFO's comment that new compute capital sees payback in under a year.
Despite the optimism, risks persist. SpaceX's ambitious capacity goals depend on large and ongoing financial commitments, with capital expenditures for the quarter totaling $18.4 billion, of which $15.8 billion was allocated to AI infrastructure. Export controls and restrictions on chip supply could also delay Nvidia's revenue recognition. As markets await further details on the SpaceX order and Friday's jobs report, all eyes remain on Nvidia's next financial update, scheduled for August 26.
