Should You Hold NVIDIA Stock as Meta & Microsoft Double Down on AI?
NVIDIA’s stock jumped nearly 2.5% recently, fueled by renewed confidence from Meta Platforms and Microsoft, two of its biggest customers. Both companies have either maintained or increased their capital expenditure for AI infrastructure, signaling ongoing demand for NVIDIA’s GPUs. Despite a 27% pullback from its 52-week high, NVIDIA remains a key player in AI hardware. The key question for investors is whether to buy more shares now or simply hold.
AI Spending Surge Boosts Demand for NVIDIA Chips
Microsoft confirmed it will stick with its massive $80 billion capital expenditure plan for AI data centers, with more than half focused on U.S. operations. Meta Platforms raised its 2025 capital spending forecast to $64-$72 billion, up from $60-$65 billion, mainly to expand AI infrastructure and data center capacity. Both companies rely heavily on NVIDIA’s high-performance GPUs, like the H100 and the upcoming B100 models.
Meta’s CFO, Susan Li, emphasized that this spending increase is AI-driven. Microsoft’s CFO, Amy Hood, indicated that while fiscal 2026 investments will grow more moderately, they will focus on projects with quicker revenue impact. These commitments suggest that NVIDIA’s chips will remain in strong demand as these hyperscalers expand their AI platforms.
Financial Strength Backed by AI Growth
NVIDIA is at the heart of the AI boom, with demand coming from large-scale cloud providers, enterprises, and startups. Its data center segment saw revenue surge 93% year-over-year to $35.58 billion in Q4 of fiscal 2025, representing over 90% of total sales. AI workloads, cloud expansion, and enterprise adoption have made NVIDIA’s GPUs essential for modern computing.
Financial results reflect this strength: revenues rose 78% year-over-year in Q4 fiscal 2025, and non-GAAP earnings per share climbed 71%. The company’s guidance for Q1 fiscal 2026 projects $43 billion in revenue, a huge jump from $26 billion a year earlier. Analysts forecast revenue growth of 48% for fiscal 2026 and 24% for fiscal 2027, with earnings rising 42% and 27% respectively.
NVIDIA has exceeded earnings expectations for the past four quarters, with an average surprise of 7.9%, indicating consistent operational execution.
Valuation Signals Caution
Despite strong fundamentals, NVIDIA’s stock appears overvalued. Its Zacks Value Score is D, and the forward 12-month Price/Sales ratio sits at 13.32X, above the semiconductor sector’s average of 10.96X. This elevated valuation means the stock could face short-term volatility despite positive long-term prospects.
Conclusion: Hold NVIDIA Stock for Now
NVIDIA remains a crucial player in the AI infrastructure race, supported by solid spending commitments from Meta and Microsoft. While the AI opportunity is significant, the stock’s current high valuation suggests caution. Holding your NVIDIA shares is prudent at this stage, rather than rushing to buy more. The stock carries a Zacks Rank #3 (Hold), reflecting balanced risk and reward.
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