We heard from Telsa and Google last week, on Q1 earnings. And we’ll hear from four more tech giants this week.
Remember, just months ago there were questions about whether the huge capex plans from this group would go forward, after the DeepSeek disruption of late January.
But they didn’t flinch. Instead, they all pressed the accelerator. In aggregate, they announced $300 billion worth of capex planned for 2025. Importantly, all in response to “signals of demand.”
Where do they stand now?
For the most recent quarter, Google and Tesla reaffirmed the big capex plans. And we should expect more of the same from the cohort this week.
From that point, the focus will turn to Nvidia’s earnings, which will come in late May.
With that, the Trump administration has recently blocked Nvidia’s exports to China, which is thought to be about a 10%-15% revenue hit.
But remember, the headwind for Nvidia is supply, not demand.
On that note, Nvidia announced two weeks ago that new capacity for its most advanced chips has just started production in Arizona, and production in Texas is due in 12-15 months. That will add to global chipmaking capacity which means Nvidia will be able to fulfill more of the demand backlog.
Amazon’s CEO (Andy Jassy) has said that the AI business could be growing faster if not for chip supply constraints. So, this U.S. onshoring of chipmaking will effectively press the accelerator on the AI revolution.
With all of this, Nvidia remains the most important company in the world, which makes the trend in this chart below (sparked by the “ChatGPT moment”) the most informative about the current stock market environment: it’s a correction within a long-term structural trend.
Relative to the ChatGPT moment, Nvidia is growing revenue three times faster, is twice as profitable, and yet its shares are cheaper (forward P/E of 24). Meanwhile, Nvidia’s market position has never been more dominant, and demand has never been more insatiable.