Part 7/8:
In the immediate aftermath of the earnings report, Microsoft shares saw volatility—initially down around 5%. However, forecasts of capital expenditures related to data center investments foster an optimistic environment as we approach the latter half of the financial year. Companies like Microsoft and Meta are expected to significantly increase their purchases of NVIDIA's GPUs, particularly with NVIDIA’s anticipated Blackwell chip launch on the horizon.
The relevant concern is what happens post-2025. If investment in data centers doesn’t continue to accelerate, we might see a stagnation or downturn in capex spending, which could signal an end to the current phase of rapid expansion for firms like NVIDIA.