Nvidia stock (NVDA) rose sharply on Wednesday after Elon Musk said SpaceX would build its artificial intelligence infrastructure exclusively around Nvidia’s processors.
The stock climbed 4.6% to about $221 in early trading.
The gains also came as rival Advanced Micro Devices looked set for a weaker session, with its shares falling more than 5% in early trading despite reporting quarterly results that exceeded Wall Street expectations.
SpaceX commits to Nvidia platform
During SpaceX’s earnings call, Musk said the company had decided to standardise its AI infrastructure around Nvidia’s latest architecture.
“Going forward, we’ve decided to build exclusively on Nvidia because we think the Vera Rubin architecture is the best architecture,” Musk told analysts.
The decision represents a notable win for Nvidia as major AI infrastructure providers increasingly evaluate alternatives, including internally developed chips and products from competing semiconductor companies.
Beyond its launch business, SpaceX also operates xAI and rents computing capacity from its data centre infrastructure.
Musk said SpaceX expects to have approximately two gigawatts of computing capacity by the end of this year, with that figure potentially increasing to as much as 10 gigawatts next year.
He also reiterated the company’s longer-term ambition to deploy Nvidia-powered orbital data centres designed to overcome land and power constraints facing terrestrial computing facilities, although the concept remains the subject of debate among industry observers.
AMD earnings fail to impress investors
Nvidia also benefited from weakness in AMD shares following the chipmaker’s earnings report.
Although AMD reported results that exceeded Wall Street expectations, investors focused on its outlook after a strong rally in the stock earlier this year.
The contrasting market reaction also highlighted Nvidia’s comparatively lower valuation.
According to FactSet, AMD trades at roughly 44 times forward earnings, compared with approximately 19.4 times for Nvidia.
Morningstar sees Nvidia as undervalued
Morningstar said Nvidia now fits the profile of a growth-at-a-reasonable-price investment.
The research firm maintained its $280 fair value estimate and said the shares continue to trade at roughly a 30% discount to that valuation.
Morningstar said Nvidia remains the leading supplier of graphics processing units, software, and networking technologies that underpin the rapidly expanding artificial intelligence market.
The firm expects cloud providers to continue investing in proprietary chips and noted that competitors, including AMD, are expanding their AI accelerator offerings.
However, Morningstar said those efforts are likely to erode only a limited portion of Nvidia’s market position.
The firm attributed Nvidia’s competitive advantage to its graphics processing technology and the proprietary CUDA software platform, which it said creates high switching costs for customers developing AI applications.
Morningstar also said it expects continued acceleration in AI capital spending during calendar 2026 and forecasts total revenue growth of about 80% for Nvidia in fiscal 2027, supporting its long-term outlook for the company.
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