Key Points
Are we heading toward an artificial intelligence (AI) infrastructure spending cliff? Some investors and analysts have been saying so for a while now, predicting that the leaders in the AI industry, such as Nvidia (NASDAQ: NVDA), could see their financial results worsen significantly once it happens. However, there are plenty of signs suggesting that AI spending isn’t slowing down at all and may actually accelerate over the medium term. We could point to projections by other analysts and institutions. Some see AI infrastructure spending exceeding $1 trillion by 2029, up from $318 billion in 2025.
Perhaps more tellingly, plenty of companies are actively saying they will spend more on AI and putting their money where their mouths are. Let’s consider three examples: Space Exploration Technologies (NASDAQ: SPCX), Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and SK Hynix (NASDAQ: SKHY). These corporations are flashing a bullish signal for Nvidia. Here’s what investors need to know.
The expensive AI infrastructure build-out
Let’s start with SpaceX, the space company with massive AI-related ambitions. SpaceX argues that AI represents, by far, its largest addressable market, which it estimates is $26.5 trillion. Before it can capitalize on this opportunity, though, SpaceX has to invest massive sums of money. In 2025, the company invested $12.7 billion in capex within its AI segment, significantly more than what it spent across its two other business units combined. And through March 31, SpaceX’s AI unit’s capital expenditures totaled $7.7 billion — representing a $30.8 billion run rate — suggesting the spending is accelerating.
And according to SpaceX’s CEO, Elon Musk, the company will continue ordering racks of Nvidia’s products. Next, let’s consider Alphabet, which recently announced an $80 billion equity capital raise to fund its AI projects. The company said it would spend between $180 billion and $190 billion in capex this year. Management also warned investors: Capex spending will grow significantly in 2027. Alphabet was also clear that Nvidia’s GPUs (Graphics Processing Units) are central to its AI business, even as it ramps up production of its internally developed custom AI chips.
Then there is SK Hynix, a South Korean company that recently made its U.S. stock market debut. SK Hynix is a leading semiconductor company that manufactures HBM (High Bandwidth Memory) chips, which are a key component packaged with Nvidia’s GPUs and provide the high-speed memory needed to run massive AI workloads efficiently. SK Hynix recently committed 1,100 trillion South Korean won (about $743 billion) to expand its manufacturing capacity over the medium to long-term. This is another bullish sign for Nvidia, as it signals that one of its suppliers is doubling down on expanding its manufacturing capacity, expecting the momentum we are seeing in the industry to continue.
What this means for Nvidia
Nvidia’s quarterly revenue has now increased sequentially for 14 straight quarters. That, in itself, is clear evidence of accelerating demand for the company’s products in an otherwise cyclical semiconductor industry, and the company should maintain that momentum. It is now clear that AI will change every sector and industry. As companies seek to implement various AI-powered initiatives — including AI agents that will automate many tasks — demand for Nvidia’s hardware should remain strong.
True, there is growing competition, but Nvidia has a massive lead in its core GPU market. It has also expanded beyond this niche and now offers products across the full stack of the AI infrastructure ecosystem, including CPUs (Central Processing Units) and GPUs, networking hardware, software, and much more. It may not be the top player across every single one of these niches, but its leadership in GPUs gives it a competitive edge in expanding across the AI infrastructure stack, allowing it to leverage its dominant ecosystem. The bottom line: The company’s tailwind likely isn’t over yet. Those who bet against Nvidia may keep losing.
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Prosper Junior Bakiny has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.
