It is always a good idea to monitor the market ratings of many industry participants before buying stocks, and that's definitely what it means Nvidia (NASDAQ: NVDA). The technology company’s main demand drivers are spending on artificial intelligence (AI) and the data centers needed to support its growth.
Despite a lot of concerns and analyst issues in the recent earnings call, there are no signs that really undermine AI demand and data center spending. Instead, there is a lot of evidence that data center demand is increasing or even accelerating. Here are three reasons:
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The first quarter transactions were excellent, and companies in the data center sector had good motivation.
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Anecdotal evidence from industry participants shows that growth is accelerating and its prospects are great.
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Reviews of senior ratings, as well as their capital expenditure plans, show continued growth.
There was nothing wrong with AI and data center spending in the first quarter. Google Parents letter)The growth of AI products in the quarter was “higher than Google Cloud’s revenue growth rate of 28% in the quarter.
This is another biggest large-scale story when Microsoft "Again, our AI business has exceeded expectations for revenue this quarter," Chief Financial Officer Amy Hood told investors' earnings call.
Players of the pickup responded to this topic. For example, Nivdia Partners verbThe first quarter provided critical digital infrastructure for data centers and communications companies increased their backlog by 10% to $7.9 billion compared to the end of 2024, and reported a 1.4 book-to-bill ratio of 1.4.
and NVENT ElectricProviding electrical connections and protection products, it has been actively investing in increasing exposure to its data centers. CEO Beth Wozniak reported mid-term order growth on his revenue call, “strong growth in data solutions and mid-digit growth in other businesses.”
For Nvent, data center growth has not slowed down. In fact, Wozniak sees “acceleration and increased demand for our solutions”. This is a view reflected by mechanical and electrical contractors American Comfort SystemCurrently, due to work in data centers and semiconductor manufacturing plants, 37% of that revenue is available. Its chief financial officer William George recently told investors: “There is no sign that the demand for electricians, plumbers and plumbers is disappointing to help build data centers.”
Vertiv CEO Giordano Albertazzi said the pipeline is growing for the 12-month and beyond.
Alphabet CEO Sundar Pichai said that with the huge growth rate in AI products, “we are definitely making more investments in AI”, and management confirmed that it intends to make a full $75 billion capital investment in 2025.
On Hyperscaler Microsoft, this is a similar story, his management said it was lacking in data center space. People are concerned about the prospect of spending in this category because Microsoft is reportedly retreating from data center rentals and halting projects.
However, CEO Satya Nadella commented that it is necessary to relate data center investment to the location of workload and the fact that Microsoft Azure is generally insufficient data center space, suggesting that callbacks are more related to adjustments to spending positions than general callbacks.
While callbacks to data center spending can always occur, so far there is no evidence that at least there is no suggestion in the companies discussed above, i.e. it will soon appear.
This is good news for NVIDIA investors, and it is also important because the market has a month to digest the new "Liberation Day" tariffs. As a result, NVIDIA and other data center stocks are still working.
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