"Through the roof." That's how Nvidia's CEO Jensen Huang described AI infrastructure spending in his excellent interview with Scott Wapner on CNBC this past Friday, February 6. Huang described the current landscape as a "once-in-a-generation infrastructure buildout," specifically highlighting that demand for Nvidia's Blackwell chips and the upcoming Vera Rubin platform is "sky-high." He emphasized that the shift from experimental AI to AI as a fundamental utility has reached a definitive inflection point for every major industry.
Investors were clearly comforted by Huang's comforting words. Earlier in the week, they trashed the stocks of the four hyperscalers (AMZN, GOOGL, META, and MSFT) after the companies announced plans to increase spending collectively by more than 60% from historic 2025 levels to a whopping $700 billion this year.
In our Friday morning QT, we wrote: "That's freaking out investors, who are worrying that such massive spending might not pay off. However, all that spending in just this year will certainly provide lots of revenues and earnings to the companies that are vendors to the hyperscalers. The economy will also get a big boost from so much capex."
Huang also dismissed concerns about overspending, stating that the capital investments are "appropriate and sustainable" because they lead to "profitable tokens" and rising cash flows. He was interviewed during CNBC's "Closing Bell" on Friday.
The three-part bottom line: The hyperscalers’ cash flow will increase as a result of all their capex, their humongous spending will boost the broad economy, and that’s bullish for a broadening of the Roaring 2020s stock market!
Also "going through the roof" after Huang used that expression was the DJIA, which rose above 50,000 for the first time ever (chart). The DJTA also rose to a new record high. Dow Theory remains bullish. The fact that the "delivery" side of the economy (Transports) is confirming the "production" side (Industrials) suggests that the market currently views the 2026 growth story as fundamentally solid.
We are still forecasting DJIA at 70,000 by the end of the Roaring 2020s.
