The AI trade could shift back in Nvidia's favor. Here's why

Infrastructure has been a huge part of the artificial intelligence rollout, with companies building data centers, networking hubs and power plants to increase capacity for power-hungry algorithms. But physical infrastructure is likely to take up a smaller share of capital expenditures in coming years relative to the core component of all that hardware – chips. The reason is that data centers can burn through chips in just a few years, while plants and bigger pieces of equipment can last decades before they wear out. That's good news for Nvidia as the premier maker of graphics processing units, or GPUs. "While the curve for data center financing will likely stabilize around 2028, chip financings will likely continue to grow into 2030, particularly as replacement demand becomes a theme," JPMorgan strategist Tarek Hamid wrote in a Tuesday note to clients. Hamid thinks that spending on GPUs and AI-specific chips could grow to 60% of total annual spending by 2030 from roughly 50%. That's relative to what he calls "data center box capex" — the more general infrastructure component. The bank also expects more than $3 trillion in financing for AI chips and essential hardware components over the next five years, with silicon spending increasing to about $800 billion in four year's time from $340 billion in 2026. NVDA YTD mountain NVDA year to date Nvidia is already reaping the benefits of the AI boom. …