Why Nvidia Stock Rallied Today
Key Points
Fears of an AI-related spending slowdown have weighed down Nvidia stock.
One of the biggest names in technology singled out Nvidia's AI platform as the "best" and plans to use its GPUs exclusively.
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Shares of Nvidia (NASDAQ: NVDA) were firmly in rally mode on Wednesday, climbing as much as 4.9%. As of 1:41 p.m. ET, the stock was still up 4.4%.
The catalyst that sent the artificial intelligence (AI) chipmaker higher was news that one of the biggest names in tech is going all in on Nvidia.
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Let the chips fall where they may
Space Exploration Technologies (NASDAQ: SPCX), aka SpaceX, is the latest company helmed by Elon Musk. The company is a triune of entities, including the SpaceX space exploration and launch business, the Starlink satellite broadband and connectivity segment, and the xAI -- the AI segment that includes Grok AI, compute, and social media platform X. Musk plans to build AI-centric data centers in space, which will require a steady supply of graphics processing units (GPUs) to underpin its AI.
After the market close on Tuesday, SpaceX unveiled its first financial report as a public company, and Nvidia got a shout-out from Musk during the earnings call, who noted that it would be building SpaceX's AI systems exclusively with Nvidia's GPUs.
Going forward, we've decided to build exclusively on Nvidia, because we think the Vera Rubin architecture is the best architecture. We think it's the best AI computer, and we greatly value our close cooperation and partnership on many levels with Nvidia. We're exclusive to Nvidia.
Musk went on to say, "Our understanding with Nvidia is that we will receive a very significant percentage of their GPUs next year." He then doubled down on his commitment, posting on X, "SpaceX has committed to using Nvidia GPUs exclusively because they are the best."
SpaceX expects to close out 2026 with more than 2 gigawatts of compute capacity, with that rising to 10 gigawatts by the end of 2027.
While we don't know precisely what that will mean for Nvidia in terms of revenue and profits, it underscores the company's dominance in AI chipmaking. This will no doubt continue to benefit Nvidia shareholders.
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Danny Vena, CPA has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
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