1 Surprising Reason Nvidia Stock Just Hit All-Time Highs

Key Points

• Nvidia shares just hit new all-time highs.

• It was actually another AI company that caused the latest run.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) stock just hit new all-time highs. But there's a catch: Nvidia's latest rise has nothing to do with the company itself, at least not directly. Instead, there's another AI stock that is causing the entire industry to rise in valuation.

News from Oracle is fueling Nvidia's stock price

Amazingly, no company with a market cap north of $500 billion has ever seen its stock price rise by more than 30% in a single trading day. But that's exactly what happened this week with Oracle (NYSE: ORCL) after the company announced blockbuster earnings with incredibly optimistic forecasts for AI infrastructure demand.

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According to Oracle's CEO, the firm inked four mega contracts in the first quarter, bringing its backlog to more than $450 billion -- four times what it was just a year ago. Oracle Cloud Infrastructure -- a division directly exposed to rising AI spending -- is expected to grow revenue by 77% to $18 billion from the previous year. Most impressively, that division is expected to reach $144 billion in revenue by 2030.

Image source: Getty Images.

The news is clear for Nvidia investors: Spending on AI technologies continues to grow rapidly industrywide. Oracle's rosy long-term forecast also adds huge momentum for Nvidia's growth prospects considering Nvidia makes and sells the top-rated GPUs: critical components that power nearly every AI process. Good news for Oracle on this front should also be good news for Nvidia, hence Nvidia's rising share price this week.

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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Oracle. The Motley Fool has a disclosure policy.