Concerns about an artificial-intelligence bubble have been weighing on Nvidia stock, but strategists at UBS dismiss those fears as overblown in a note today.
Nvidia shares were up 0.3% at $176.77 in premarket trading, while S&P 500 futures had dipped 0.1%, and Dow Jones Industrial Average futures were little changed. The stock has dropped 2.8% over the past month through to Monday’s close. Nvidia’s relative strength stood in contrast to other chip makers: Advanced Micro Devices was down 0.7% and Broadcom was falling 0.7% in premarket trading. Broadcom has fallen 16% in the past five trading sessions.
"While we expect global AI capex to continue to rise over the coming years, we do not see evidence of an investment bubble," wrote Mark Haefele, chief investment officer at UBS Global Wealth Management, in a research note Tuesday.
Global capital expenditure on AI is expected to reach $571 billion in 2026, up from $423 billion this year, according to UBS. The bank expects the total addressable market for AI to be $3.1 trillion in revenue potential by 2030, suggesting a compound annual growth rate of 30% over the next five years.
"As AI adoption expands from consumer chatbots to broader enterprise and industry use cases, we estimate that the required compute capacity could be orders of magnitude greater than today's installed base," wrote Haefele.
On Monday, Nvidia announced the acquisition of SchedMD, a Utah-based software company that provides open-source workload management systems for high-performance computing and AI. It didn't disclose the terms of the deal.
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