NVIDIA’s AI Infrastructure Spending Skyrockets
NVIDIA’s CEO, Jensen Huang, recently shared insights about the company’s robust investment in AI infrastructure during an engaging interview with Scott Wapner on CNBC. He referred to the current demand as a “once-in-a-generation infrastructure build,” noting a significant surge in interest, particularly for Nvidia’s Blackwell chips and the upcoming Vera Rubin platform. Huang pointed out a pivotal shift from experimental AI to more utility-based AI across various industries.
Investors seemed reassured by Huang’s optimistic remarks. Earlier that week, major tech companies—AMZN, GOOGL, META, and MSFT—saw their stocks tumble after they announced plans to increase their spending by over 60% from previous levels, totaling nearly $700 billion this year.
In our Friday morning QT, we mentioned how this announcement surprised investors, who were worried that such massive spending might not yield returns. Yet, it’s evident that this year’s investments will lead to substantial revenue and profits for hyperscaler vendors. The economy stands to gain a notable boost from this influx of capital.
Huang rejected fears surrounding potential overspending, asserting that the capital outlay is “appropriate and sustainable” because it generates “profitable tokens” and enhances cash flow. This interview aired on CNBC’s “Closing Bell” last Friday.
In summary, the capital expenditures of hyperscalers will likely elevate their cash flows, which in turn should invigorate the overall economy, ultimately favoring stock market growth throughout the Roaring 2020s.
Interestingly, the DJIA surged after Huang’s remarks, crossing 50,000 for the first time. The DJTA also reached a new high. According to the Dow Theory, this is a positive indicator, as the growth in the ‘distribution’ sector, like transportation, supports the ‘production’ side, suggesting solid growth potential for 2026.
We maintain our prediction that the DJIA could reach 70,000 by the end of the Roaring 2020s.
For several years now, skeptics have cautioned that the bull market seems overly reliant on just a handful of tech giants, including four hyperscalers. Their concerns arise from the fact that these seven stocks represent more than 30% of the S&P 500’s market capitalization, meaning that their fluctuating values could leave the overall market vulnerable to significant drops.
Of the Magnificent Seven, four are part of the DJIA (AAPL, AMZN, MSFT, NVDA), and they haven’t performed as well this year. However, this didn’t prevent the DJIA from achieving new highs.
On the same day, the S&P 500 also set a new record. The S&P 500 Current Affairs Weighted Price Index increased by 1.3%, with a year-over-year gain of 5.5%, indicating how large-cap stocks have lagged in comparison.
Interestingly, various sectors that underperformed last year have shown stronger performance so far this year.
In comparative terms, since November 3, 2025, the MAGS ETF has underperformed against the XMAG ETF, particularly after the AI trading short announcement on October 27. We suggested reducing exposure to the Magnificent Seven starting December 7, 2025.
As for the analysts, they continue to adjust their forecasts for S&P 500 operating profits in 2027, which is notable since the index reached an all-time high recently. Their estimates for future earnings stand at $363.03 per share, while our expectation is pegged at $350.00.
The upward trend in the year-over-year change for S&P 500 forward revenue and future earnings shows consistent improvement.
Lastly, analysts are becoming increasingly optimistic about the long-term earnings growth outlook for the S&P 500.
We caught up with Michael Brash regarding insider buying trends: “Insider purchases spiked sharply following last week’s dip. This signals confidence in the market and economy, with buying concentrated in cyclical stocks. Notably, insiders invested over $15 million across 20 companies, a sharp rise from the week prior, focusing on industrials, chemicals, electrical components, banks, and consumer goods. Plus, major stakeholders invested over $140 million in various stocks—a significant uptick from previous weeks, marking them as clear insiders.”
