Should You Hold NVIDIA Stock as Meta & Microsoft Double Down on AI?

NVIDIA Corporation NVDA stock gained nearly 2.5% on Thursday, buoyed by a renewed wave of optimism from two of its largest customers, Meta Platforms, Inc. META and Microsoft Corporation MSFT. Both tech giants reaffirmed, and in Meta Platforms’ case, raised their capital expenditure commitments toward AI infrastructure.This resurgence of AI-related investment could mark a key turning point for NVIDIA stock, which has pulled back 27% from its 52-week high of $153.13 attained on Jan. 7, 2025. With the renewed optimism about AI investment, the question arises: Should investors rush to buy more, or is holding the stock the smarter move right now?Image Source: Zacks Investment ResearchAI Spending Spree Could Reignite Demand for NVIDIA’s ChipsMicrosoft, a major cloud provider and longtime NVIDIA partner, confirmed during its third-quarter fiscal 2025 earnings call that it will maintain its massive $80 billion capital expenditure plan for AI data centers, with more than half of that directed toward U.S. operations.Meanwhile, during its first-quarter 2025 earnings call, Meta Platforms increased its 2025 capital spending outlook to a range of $64-$72 billion, up from the prior $60-$65 billion range. The added spending will primarily go toward expanding data center capacity and AI infrastructure, both heavily reliant on NVIDIA’s high-performance graphics processing units (GPUs).Meta Platforms’ CFO, Susan Li, made it clear that the CapEx bump is driven by AI ambitions and infrastructure upgrades. Similarly, Microsoft CFO Amy Hood indicated that fiscal 2026 investments will grow, albeit at a slower pace, and be more closely aligned with short-term revenue gains, implying accelerated AI workload deployments.These commitments are strong signals that NVIDIA’s chips, especially its H100 and upcoming B100 GPUs, will remain in high demand as hyperscalers scale their AI platforms.AI Boom Driving NVIDIA’s Financial PerformanceNVIDIA’s products are at the center of the ongoing AI revolution, driving demand from hyperscalers, enterprises and cutting-edge startups alike. The data center end-market continues to be a powerhouse for NVIDIA. In the fourth quarter of fiscal 2025, revenues from the data center end-market grew 93% year over year to $35.58 billion and contributed 90.5% to the total sales.AI-driven workloads, cloud computing expansion and increasing enterprise adoption of AI models have turned NVIDIA’s high-performance chips into a necessity rather than a luxury. With businesses aggressively investing in AI infrastructure, NVIDIA remains positioned at the heart of this technological transformation.Financially, NVIDIA is firing on all cylinders. In the fourth quarter of fiscal 2025, revenues surged 78% year over year, while non-GAAP EPS climbed 71%. The company’s first-quarter fiscal 2026 guidance of $43 billion in revenues represents a staggering increase from $26.04 billion in the prior-year quarter.Analysts expect NVIDIA to maintain this momentum, forecasting fiscal 2026 and 2027 revenue growth of 48% and 24%, respectively. With earnings projected to rise 42% in fiscal 2026 and 27% in fiscal 2027, NVIDIA’s long-term investment case remains intact. The stock surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 7.9%.NVIDIA Corporation Stock Price, Consensus and EPS Surprise NVIDIA Corporation price-consensus-eps-surprise-chart | NVIDIA Corporation QuoteNVIDIA Overvaluation Warrants a CautionValuation-wise, NVIDIA is overvalued, as suggested by the Zacks Value Score of D.However, in terms of forward 12-month Price/Sales, NVDA shares are trading at 13.32X, higher than the Zacks Semiconductor – General industry’s 10.96X.Image Source: Zacks Investment ResearchConclusion: Hold NVDA Stock for NowNVIDIA’s stock may be off its highs, but the AI megatrend is very much alive and is receiving fresh fuel from the likes of Meta Platforms and Microsoft. Their deep-pocketed commitments to AI infrastructure spending underscore NVIDIA’s strategic importance in the evolving tech landscape. However, its high valuation makes it vulnerable to short-term volatility. For now, holding the stock is the smartest approach.Currently, NVIDIA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks