Nvidia (NVDA) shares slipped about 0.3% to $214.86 in premarket trading Wednesday, even as CEO Jensen Huang unveiled plans to boost annual spending in Taiwan to $150 billion and build a new headquarters on the island. The chipmaker's market capitalization stood at approximately $5.24 trillion.
The slight dip came against a backdrop of cautious optimism in broader markets. Nasdaq 100 futures rose 0.45% early Wednesday, following record closes for both the S&P 500 and Nasdaq Composite. Traders continued to buy on renewed AI hopes, though concerns over Middle East tensions and rising bond yields lingered.
Huang's Taiwan Pivot
Speaking in Taipei, Huang described Taiwan as "the epicentre of the AI revolution" and announced plans to lift annual spending on the island to roughly $150 billion from about $100 billion. The company's new Taiwan headquarters is slated to begin construction this year, with a targeted opening in 2030 and an expected workforce of 4,000 employees, according to Reuters.
Taiwan is critical to Nvidia's supply chain. Taiwan Semiconductor Manufacturing Co. (TSM) produces the majority of the high-end silicon used in AI servers, while Foxconn, Wistron, and Quanta assemble the server systems purchased by cloud companies.
Earnings and Guidance
Last week, Nvidia reported first-quarter revenue of $81.6 billion, up 85% year-over-year. Data Center revenue reached $75.2 billion, driven by AI model training and inference workloads. For the second quarter, Nvidia guided revenue of $91 billion, plus or minus 2%, and the board authorized an additional $80 billion in stock buybacks.
Notably, Nvidia's forecast excludes any Data Center compute revenue from China, as the company continues to monitor shifts in export rules. Compute encompasses the processing power that runs AI systems.
Analyst Perspectives
Investor skepticism about the longevity of Nvidia's growth trajectory persists. "Nvidia delivered another beat," eMarketer analyst Jacob Bourne told Reuters last week. However, he noted the key issue is "whether it can convince investors the AI buildout has durability into 2027 and 2028."
Morningstar analyst Brian Colello raised his fair value estimate on Nvidia to $280 from $260 following the earnings release, citing "no slowdown" in demand for Nvidia's AI products. Data Center sales to hyperscale customers—primarily major cloud players—totaled $37.9 billion, representing half of all Data Center revenue, according to Morningstar.
Broader Market Implications
Nvidia's rally continues to lift suppliers and other chip stocks. Micron Technology briefly crossed $1 trillion in market capitalization on Tuesday after UBS raised its price target. Art Hogan, chief market strategist at B. Riley Wealth, said Micron "sits at the center" of growing demand for memory chips, which manage and transfer data for AI, while Nvidia's GPUs handle much of the actual AI processing.
Qualcomm shares jumped nearly 5% Tuesday after Bloomberg News reported the company secured a deal to supply ByteDance with AI data-center chips called ASICs. Reuters has not confirmed the deal but noted some buyers are seeking cheaper alternatives to Nvidia's chips. Broadcom and Marvell are also developing custom silicon solutions.
Bearish calls on Nvidia are growing louder. Investor Michael Burry recently posted on Substack that "conditions for an aggressive fall" in Nvidia are strong, citing heavy customer concentration and the threat of a "bullwhip" effect—a supply chain phenomenon where small demand shifts can trigger outsized order swings, as reported by Business Insider.
The broader market backdrop remains supportive. Goldman Sachs raised its S&P 500 year-end target to 8,000 from 7,600, citing earnings growth fueling this year's gains. The bank estimates that AI infrastructure firms could account for nearly half of 2026 earnings growth.
As Nvidia heads into Wednesday's trading session, the stock carries a valuation befitting a company at the center of the AI trade, but it is being watched as if there is no room for error.
