The reason for NVidia's stock decline isn't because AI is hype.
Just look at their
earnings report from February. If AI is all hype, NVidia wouldn't have grown their datacenter sales by 93 percent year-over-year to $35.6 billion with $11 billion of that coming from sales their new Blackwell chips.
NVidia isn't the only one seeing strong demand due to AI. In Broadcom's
earnings report yesterday, they said their AI revenue grew 77 percent year-over-year to $4.1 billion.
"Broadcom's record first quarter revenue and adjusted EBITDA were driven by both AI semiconductor solutions and infrastructure software. Q1 AI revenue grew 77% year-over-year to $4.1 billion and infrastructure software revenue grew 47% year-over-year to $6.7 billion," said Hock Tan, President and CEO of Broadcom Inc. "We expect continued strength in AI semiconductor revenue of $4.4 billion in Q2, as hyperscale partners continue to invest in AI XPUs and connectivity solutions for AI data centers."
If AI is hype, why are the big tech companies (i.e. Amazon, Alphabet, Meta, Microsoft) going to spend up to a combined
$320 billion this year to build out their AI datacenters? That's a 39.13% increase from the $230 billion they spent in 2024.
2025 AI Datacenter Capital Expenditures
- Amazon: over $100 billion vs $83 billion in 2024
- Alphabet: $75 billion
- Meta: between $60 billion and $65 billion
- Microsoft: $80 billion