In the early trading session on Thursday, shares of Nvidia soared  by 4.3%, propelling the entire semiconductor sector after both Meta and Microsoft announced plans to continue aggressive investments in AI. Other AI chipmakers did benefit as well, with Advanced Micro Devices (AMD) up 1.3% and Broadcom climbed 2.4%. Nvidia supplier Micron (MU), which produces memory chips for Nvidia’s high-end GPUs, added 2.7% according to News.Az reports.

This boost followed post-earnings announcements by Meta and Microsoft late on Wednesday, which revealed their intention to increase spending on AI infrastructure for scaling up data center capacities in a race to meet their artificial intelligence aspirations.

Meta and Microsoft

Meta updated its 2025 capital spending forecast to range between $64 billion and $72 billion, up from the prior forecast of $60 billion to $65 billion. The additional spending will be for data center capacity expansion and AI enhancements. Meta CFO Susan Li said,

“This updated outlook reflects additional data center investments to support our AI efforts as well as an increase in the expected cost of infrastructure hardware. The majority of our CapEx in 2025 will continue to be directed to our core business.”

Microsoft, on the other hand, maintains its long-standing commitment to spend $80 billion proving AI-powered data centers, claiming that somewhat more than half of that expenditure would go to projects in the U.S. Microsoft’s CFO Amy Hood said:

“We remain committed to investing against the strong demand signals we see for our services,”

Adding that its investment plans for its 2026 fiscal year, which starts in July, remain unchanged.

Hood added,

“We expect CapEx to grow. It will grow at a lower rate than FY ’25 and will include a greater mix of short-lived assets, which are more directly correlated to revenue than long-lived assets. These investments along with focused execution that delivers near-term value to our customers will ensure we continue to lead through the cloud and AI opportunity ahead.”

Nvidia’s Major Clients

The announcements from Meta and Microsoft bring good news to Nvidia, since both are among the company’s top customers. As per DA Davidson, Microsoft has brought in around $20 billion of Nvidia’s 2024 revenue, while Meta is to contribute an estimated $9 billion. Investors have been anxious about an alleged slowdown in AI spending from Microsoft due to data-center projects being canceled earlier in the year. With the recent announcement, the guidance seems to have calmed those jitters.

To the extent that Meta proves its AI tools are gaining traction, 30% more advertisers are using its AI platforms, with “almost 1 billion” monthly active users engaging with its Meta AI assistant. Microsoft’s Intelligent Cloud sector overseeing the AI business grew 21% year-over-year to approximately $27 billion, while Azure cloud revenue increased by 35%, with AI contributing 16 percentage points to that growth.

Nvidia Bounces Back after AI Optimism

After dropping almost 19% due to restrictions from trade with China and profit-taking trends, Nvidia bounced back and narrowed down those losses on Thursday by some margin. Still, gains came despite a rare “Sell” rating from investment firm Seaport, which implied that AI enthusiasm was “in-pricing” for the moment. It still faces trade restrictions that President Trump had imposed in the past, which would hamper its business in China, one international market that Nvidia cannot ignore.

Renewed monetary commitments from Meta and Microsoft speak volumes about how central they still are to the AI boom, an aspect which might help the chip giant in keeping its uppermost position despite intensifying competition and the rising stakes of geopolitical pressure. Thursday’s rally suggests that investors seem to think that Nvidia still holds the key to an AI future, although it is a road lined with potholes from policies and speed bumps from competition.