CoreWeave Just Announced Fantastic News for Nvidia Stock Investors

One of the hottest debates on Wall Street concerns the future of artificial intelligence (AI) infrastructure spending and its potential impact on industry leaders, such as Nvidia (NASDAQ: NVDA). Some investors believe that the AI tailwind won't last much longer, and as it slows, Nvidia's shares will plunge. Others think the semiconductor specialist is still looking at a large growth runway. Who is right?

Earnings season has given us more evidence for the bull thesis. Consider, for instance, CoreWeave's (NASDAQ: CRWV) second-quarter results, released on Aug. 11. The AI-focused cloud computing company's update gave us more reasons to believe Nvidia's run is far from over. Here's what investors need to know.

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CoreWeave is firing on all cylinders

CoreWeave operates data centers tailored for AI workloads. Since Nvidia's GPUs (Graphics Processing Units) are still arguably the most effective hardware for training and running AI applications, CoreWeave buys racks of them. As demand for the company's services increases, CoreWeave will need to expand its capacity and purchase additional GPUs. That seems to be what will continue happening for the foreseeable future, as evidenced by CoreWeave's second-quarter results.

The company's revenue was $2.6 billion, up 112.5% year over year. CoreWeave's revenue backlog as of the end of the period was $104 billion, up 245.5% from the year-ago quarter. CoreWeave's operating and net losses widened compared to the prior-year quarter, but this reflects the company's continued investment in the business, which seems more than justified considering its revenue and backlog growth. Management pointed out that CoreWeave's capacity is sold out in the near-term, while demand continues to intensify.

What it means for Nvidia's future

CoreWeave's excellent second-quarter results signaled that AI infrastructure spending hasn't peaked yet and were unquestionably a bullish sign for Nvidia. Does that mean investors should buy Nvidia's stock ahead of its upcoming earnings update? On Aug. 26, Nvidia will release its financial results for the second quarter of its fiscal year 2027, which ended on July 26.

However, the company is unlikely to impress the market, even if it beats on revenue and earnings, which it has done more often than not in recent years. Wall Street has ceased to be impressed by that. That said, Nvidia's shares may still be a buy ahead of Aug. 26 for investors focused on the long game.

The company's lead in the GPU market remains impregnable, partly thanks to its CUDA ecosystem, which provides a wide moat from switching costs. Nvidia is also tapping into new opportunities. It estimates a $200 billion addressable market in the CPU (Central Processing Unit) industry, driven by the rise of agentic AI systems that run on CPUs. Nvidia is well-positioned to capture a corner of that space as well.

Lastly, the stock remains fairly valued. Nvidia is trading at 24.8x forward earnings, versus an average of 21.1x for information technology stocks. At the rate at which Nvidia's earnings continue to grow -- and given sustained demand for its products -- that seems more than fair. For all those reasons, the stock is still a buy.

Prosper Junior Bakiny has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.