Adoption of artificial intelligence (AI) continues apace, but some are waiting for the other shoe to drop. The strengthening U.S. economy and strong quarterly results from several AI-related companies helped drive the market higher. Nasdaq Composite to a new record last week. Yet these same factors have some investors wondering whether the bull market has gone too far, too fast.

Nvidia (NVDA 1.99%) became the de facto standard bearer of Generative AI industry. The company is expected to report its third-quarter fiscal 2025 results in less than three weeks, and it’s no exaggeration to suggest that Wall Street is on needles and needles as it awaits the clues the report will offer on the AI adoption status. Nvidia’s sales have surged since the start of last year, sending the stock up 833% (as of this writing). It also represents less than 5% of the all-time high reached late last month.

A lot depends on Nvidia’s next financial report, and many shareholders are wondering whether the stock can possibly continue its breathtaking run. Is it worth buying shares before its November 20 financial report? Fortunately for investors, data has started to accumulate that could help answer that question.

Image source: Getty Images.

Sun on a cloudy day

The key to Nvidia’s incredible successes in recent years lies in the performance of its graphics processing units (GPUs)which are the best chips to provide the specific type of computing power needed for generative AI, as well as other types of cloud computing needs. The resources required and the scale of data involved limit leading AI models to the world’s largest technology companies and cloud providers, most of which are Nvidia customers. Comments made in connection with recent quarterly results from these tech giants provide insight into the state of the AI ​​revolution – and the evidence is clear.

For example, Microsoft (MSFT 0.99%) said it spent heavily to advance its AI agenda during its first quarter of fiscal 2025 (which ended September 30). The company had capital expenditure (capex) of $20 billion, which was primarily used to support “cloud and AI-related” demand. CFO Amy Hood expects Microsoft’s spending spree to continue: “We expect capital spending to increase sequentially given our cloud and AI demand signals “, she said.

During AlphabetIt is (GOOGL 0.10%) (GOOG -0.02%) During the third-quarter earnings call, CEO Sundar Pichai said, “Realizing the AI ​​(opportunity) requires… significant capital investment.” The company revealed investments of $13 billion during the quarter and suggested there would be “substantial increases in capital investments…through 2025.”

To complement the big three cloud providers, Amazon (AMZN 6.19%). During the third-quarter earnings conference call, CEO Andy Jassy called the generative sector a “maybe once-in-a-lifetime type of opportunity…we’re pursuing it aggressively.” Chief Financial Officer Brian Olsavsky put that in context, saying Amazon’s investments would amount to about $75 billion this year, much of which would go toward cloud computing and AI infrastructure. The company also announced that it will unveil “100 new cloud infrastructures and AI capabilities” at the AWS re:Invent show later this month.

Finally, there is Metaplatforms (META -0.07%). Although it is not a cloud provider, the company’s social media sites attract 3.29 billion people every day, providing Meta with vast volumes of user data. The company raised its full-year capex guidance to about $39 billion, and Chief Financial Officer Susan Li said, “We continue to expect significant growth in capital spending in 2025.” She had previously highlighted that this was to “support our AI research and product development efforts.”

Why it matters

The trend toward accelerating investments to meet growing demand for AI is clear. Additionally, much of this money will be spent on the data centers and servers needed for cloud computing, where the majority of generative AI software is located. As such, Nvidia will likely benefit from much of this spending.

Nvidia has always kept quiet about its biggest customers, but that hasn’t stopped Wall Street from digging a little. Analysts from Bloomberg and Barclays Research crunched the numbers and came to the conclusion that Nvidia’s four largest customers, generating a combined 40% of its sales, are:

• Microsoft: 15%
• Metaplatforms: 13%
• Amazon: 6.2%
• Alphabet: 5.8%

Each of these companies has left no doubt that they intend to spend heavily on capital expenditure, and in particular to spend heavily on infrastructure to support their cloud computing and AI aspirations. As the leading supplier of data center GPUs, Nvidia will likely continue to be at the top of the list of beneficiaries of this spending.

Mark your calendar

Nvidia will report its next set of quarterly results on November 20. After posting triple-digit year-over-year growth for five straight quarters, the company has tried to keep market expectations in check, this time suggesting revenue growth. will only clock in at around 79%. While this would constitute a deceleration, it would also be remarkable growth by any stretch of the imagination.

Investors looking to make money over the next three weeks may be disappointed. No one can say for sure how Nvidia stock will react to the report, even if the company beats expectations.

To recall the difficulties linked to short-term forecasts, investors only need to look back at this summer, when, from mid-June, Nvidia stock lost up to 27% of its value, fearing that its new generation Blackwell AI processors would be delayed – only to come back with a vengeance. This was an illustration of the fact that with this stock, volatility is part of the cost of entry. That said, both feedback from its large tech customers and their historical spending habits suggest that Nvidia still has strong growth ahead.

For investors looking for stocks to hold for years and decades rather than weeks and months, Nvidia is an obvious choice to benefit from the AI ​​revolution. And trading at around 32 times next year’s earnings, it remains attractively priced. I can’t say for sure how the stock will perform between now and November 20th. What I can say — with a certain degree of confidence — is that investors who buy Nvidia stock soon and will keep it for three to five years or more, I will be very happy.