Nvidia stock (NVDA) rose more than 2% on Wednesday after an industry report predicted “unprecedented” levels of investment in artificial intelligence, a bullish sign for the AI chipmaker.
Consulting firm Bain’s annual technology report released Wednesday predicts that companies will need to make “unprecedented levels of investment” in technology infrastructure to continue riding the artificial intelligence boom.
“If large-scale data centers cost $1 billion to $4 billion today, data centers could cost $10 billion to $25 billion in five years,” the report said.
The company’s research also said data center operators and hardware suppliers could enjoy a short-term windfall as businesses and governments splurge on computing power.
“For example, NVIDIA projects that revenues from government sovereign AI investments will reach $10 billion in 2024, up from zero last year,” the report says.
For the past few months, Wall Street has been looking for clues about how long big infrastructure investments will last and what the return on investment will be for AI chip buyers.
Nvidia shares extended their early gains on Wednesday after CEO Jensen Huang appeared to have ended his stock sale for the time being.
A sign to the Nvidia office building on Wednesday, August 7, 2024 in Santa Clara, California. (AP Photo/Jeff Chiu) (ASSOCIATED PRESS)
Hwang has liquidated about $713 million worth of shares in the past few months as part of a plan to sell 6 million shares by March 2025, a goal he achieved sooner than expected.
Despite selling his shares, Hwang remains the company’s largest shareholder.
Nvidia stock is up about 20% since Sept. 6 and more than 150% year-to-date.
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Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X @ines_ferre.
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Correction: An earlier version of this article contained an incorrect spelling of Jensen Phan’s name. We apologize for the error.
