NVIDIA Corporation

(NASDAQ Global Select)
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Bullish +65

Microsoft just gave Nvidia shareholders a reason to pay attention

AI infrastructure Customer growth Financial outlook AI-generated analysis

πŸ“ˆ Microsoft's fiscal first-quarter capex of $45.2 billion saw roughly three-quarters allocated to short-lived assets including GPUs and data center networking gear, totaling approximately $34 billion in a single quarter.

πŸ’» Nvidia's data center business generated $89 billion in revenue during its fiscal second quarter, representing 117% year-over-year growth and accounting for about 92% of the company's total sales.

πŸš€ Microsoft expects capital expenditure to top $50 billion in the second quarter with a full-year guidance of roughly $170 billion, driven by continued demand for CPUs and GPUs.

πŸ“Š Nvidia guided third-quarter revenue to approximately $108 billion, excluding data center compute sales to China, signaling sustained strong performance from its core business.

πŸ”‹ Microsoft CFO Amy Hood stated that the company still has demand that exceeds supply, reinforcing the robustness of the AI chip market despite recent stock volatility.

βš™οΈ Nvidia recently launched its first stand-alone CPU called Vera to compete for a share of the growing capital spending on CPUs and GPUs from major cloud providers.

🀝 Jensen Huang indicated at least $1 trillion in orders for Blackwell and Vera Rubin chips through 2027, with SpaceX also planning to use Nvidia's Vera Rubin chips for new computing capacity.

πŸ“‰ Nvidia's forward price-to-earnings ratio fell to about 23.2 by July, trading near parity with the S&P 500 after years of commanding a steep premium.

Bullish Signals
  • Microsoft allocated roughly $34 billion in quarterly capex to short-lived assets including GPUs and data center networking gear, validating strong demand for Nvidia's core products.
  • Nvidia's data center business brought in $89 billion in its fiscal second quarter, up 117% from a year earlier, accounting for about 92% of total sales.
  • Microsoft guided for Azure growth of 49% to 50% next quarter with Copilot users jumping 50%, indicating sustained demand that exceeds supply for AI infrastructure.
  • Nvidia guided third-quarter revenue to approximately $108 billion, demonstrating resilience and continued strong performance from its dominant data center segment.
  • Major customers like Microsoft are increasing spending on CPUs and GPUs, providing a new growth avenue for Nvidia with its newly launched Vera CPU.
Risk Factors
  • Nvidia's stock has cooled off significantly, rising only about 13% in 2026 compared to over 1,200% gains over the past three calendar years as investors fret about overspending.
  • The company depends heavily on a small group of very large buyers, meaning any pullback by major customers like Microsoft or Alphabet would hit its results hard.
  • Many of Nvidia's largest customers are borrowing to fund their AI build-out, with Morgan Stanley estimating AI-related global debt issuance will approach $570 billion in 2026.
Full Analysis
Nvidia's stock has cooled from its massive gains over the past three years, with shares rising only about 13% in 2026 as investors worry that Big Tech is overspending on data centers. However, a recent report from Microsoft provides fresh optimism for Nvidia shareholders by revealing that a significant portion of the cloud giant's capital expenditure is directed toward chips and networking gear. Microsoft reported fiscal first-quarter revenue of $92.3 billion, with its Azure cloud business growing 48%. Crucially, roughly three-quarters of Microsoft's $45.2 billion in quarterly capex went to short-lived assets including CPUs, GPUs, and data center networking equipment, amounting to approximately $34 billion in a single quarter. This spending is driven by strong customer demand that currently exceeds supply. Nvidia has heavily benefited from this trend, with its fiscal second-quarter revenue more than doubling to $96.2 billion, largely driven by an $89 billion data center business that accounts for about 92% of total sales. The company has guided third-quarter revenue to approximately $108 billion and maintains a strong outlook as major customers like Microsoft continue to increase their AI infrastructure spending.