Nvidia's stock is climbing as investors get more confidence in an expanding base of AI customers

By Hannah Pedone and Britney Nguyen

Dell's earnings showed that demand for AI hardware extends beyond major cloud providers

Shares of Nvidia closed up 3.2% on Wednesday.

Nvidia's stock got a boost from Dell Technologies' earnings on Wednesday, with analysts noting that the server maker's commentary helped validate Nvidia's view of a robust and expanding artificial-intelligence market.

"Dell's results present a further sign that the enterprise market for AI compute has momentum beyond the current hyperscaler market," D.A. Davidson analyst Gil Luria told MarketWatch, referring to computing power.

The server maker reported what analysts said was a blowout quarter, as revenue for its AI server business doubled relative to a year before.

While there's been clear momentum in demand for computing power among the hyperscalers, analysts believe Dell's (DELL) results show that the data-center buildout is supporting demand growth for enterprise hardware too, which could be a boon for Nvidia (NVDA). There have been concerns that major cloud providers were overwhelmingly driving sales of AI hardware.

Wedbush analyst Matt Bryson told MarketWatch that Dell's results support Nvidia's "optimism around non-hyperscale growth."

Nvidia's stock rose 3.2% on Wednesday.

Broader market dynamics may have also been working in Nvidia's favor on Wednesday.

Rebecca Wettemann, CEO of technology-research firm Valoir, said Nvidia was likely benefitting from a general market rebound on Wednesday as investors responded to momentum in oil prices and a pullback in Treasury yields. However, she said in emailed comments that the market would continue to be volatile "given the geopolitical and economic uncertainty."

"Nvidia's fundamentals are strong, and its recent earnings announcements and guidance gave investors confidence that it continues to have strong demand and a pretty significant moat in its chip business," Wettemann said.

Last week, Nvidia reported blockbuster second-quarter earnings results, which led to the company achieving its largest one-day market-capitalization gain on record. The company expects revenue to grow by about 70% in the 2028 fiscal year, which runs through January of that year.

Jed Ellerbroek, a portfolio manager at Argent Capital Management, said "investors are becoming more valuation conscious" across the chip and broader AI-infrastructure trade, and Nvidia looks like "the best company in this area" given its "attractive multiple."

-Hannah Pedone -Britney Nguyen

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