Nvidia Corp (NASDAQ:NVDA, ETR:NVD) still faces a gap between its revenue forecast and the planned capital expenditure (capex) of major hyperscalers, but this gap has narrowed slightly as analysts at UBS see rising capex expectations for 2025.
Large cloud service providers like Meta, Alphabet, Amazon and Microsoft have raised their capex expectations for 2025 from $293 billion to $303 billion since the start of the year.
Meta guided $62.5 billion in capex for 2025 amid strong earnings growth, which did not negatively impact market sentiment.
Google parent Alphabet, on the other hand, announced higher-than-expected capex of $75 billion, compared to the consensus estimate of $58 billion. This came alongside a revenue miss and weaker Cloud segment performance, which saw its stock fall about 8%.
Since revenue estimates for 2025 remain unchanged, investors will likely question what new AI or cloud-related products justify the increased capex spending, analysts believe.
“One key topic in assessing the outlook for correlation and volatility in the US will be whether hyperscaler capex estimates need to be revised up to better align with their historical pattern with Nvidia revenues,” analysts wrote.
Analysts see a downside risk to Nvidia’s forecasts, especially amid rising competition from other AI developers such as DeepSeek.
If tech companies cannot increase revenues fast enough to offset rising costs, earnings growth could weaken, leading to higher stock correlations, analysts believe.
Shares of Nvidia traded up 2.3% just shy of $128 in the early afternoon on Thursday, having gained about 87% in the last 12 months.