Nvidia stock reversed course Thursday after rallying earlier this week on the back of President Trump’s announcements on artificial intelligence. Investors had been worried about a slow rollout of the company’s Blackwell chip but a flagship $500 billion AI plan is soothing those fears.
Nvidia shares were down 2% to $144.20 in premarket trading. It rose 4.4% Wednesday, amid broad gains for AI stocks, fueled by the announcement of the Stargate Project — an AI infrastructure investment partnership between the White House, Oracle, OpenAI, and SoftBank.
Thursday’s premarket drop may well be investors taking profits after a good two-day run.
Nvidia is mentioned as a partner in Stargate but not one of the key players and analysts are predicting it could greatly boost the chip maker over the coming years.
The Stargate initiative pledged up to $500 billion in investments in AI infrastructure such as data centers over the next four years. Of that, 25%-50% could be spent on advanced chips — an area where Nvidia is the clear market leader, Melius Research analysts led by Ben Reitzes wrote in a Wednesday note. “Well over $100B of this spend could go to [Nvidia], ” Reitzes said, noting that Broadcom and Arista may get a good chunk, too.
The broker rates Nvidia shares Buy with a $195 price target.
Investors have worried that sales of Nvidia’s most advanced AI chip won’t ramp up fast enough to offset declines in sales of its older chips, especially given the delays in Blackwell deliveries.
Stargate and Trump further signaling that AI will be a priority under his administration should go a long way in abating those concerns.
While near-term revenue may be constrained by the transition to Blackwell-based systems, it doesn’t really matter since Nvidia is increasingly benefiting from its role in AI infrastructure in the U.S., Reitzes said. And Stargate may be looking to purchase as much as $200 billion in Nvidia products over the next four years, according to his analysis.
“Stargate sure puts Blackwell transition in perspective.”