$NVIDIA(NVDA)$ $NASDAQ(.IXIC)$
The U.S. stock market is on fire, with the S&P 500 hitting another record high at 6,263.26 and the Nasdaq soaring past 21,000, driven by tech giants like Nvidia (NVDA) and AMD, which both jumped over 2% on July 23, 2025. President Trump’s newly unveiled “America AI Action Plan” promises to slash regulations and accelerate data center development, igniting optimism for AI-driven companies. Alphabet’s $10 billion capex hike for 2025, aimed at bolstering AI infrastructure, is seen as a bullish signal for Nvidia, the king of AI chips. With big tech earnings looming and capex trends rising, investors are buzzing: Is Nvidia’s rebound sustainable, or will it consolidate around $170? Can it aim higher than its $4.17 trillion market cap? This report dives into Trump’s AI plan, the capex surge, Nvidia’s outlook, and strategic investment approaches to ride this wave while managing risks.
Trump’s AI Action Plan: A Catalyst for Nvidia
Announced on July 23, 2025, the “America AI Action Plan” outlines over 90 policy actions across three pillars to cement U.S. dominance in artificial intelligence:
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Accelerating Innovation: Easing regulations on AI development, including streamlining permits for data centers and semiconductor plants, directly benefits Nvidia’s chip manufacturing and supply chain.
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Building AI Infrastructure: Promoting data center expansion and high-performance computing aligns with Nvidia’s H200 and Blackwell chips, which power 90%+ of AI workloads.
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Leading in International Diplomacy: Encouraging exports of U.S.-developed AI technologies could boost global demand for Nvidia’s GPUs, with the Commerce and State Departments partnering to deliver AI export packages.
The plan, backed by three executive orders signed on July 23, aims to remove “red tape” and eliminate “ideological bias” in AI systems, per the White House. While the bias focus is less relevant to Nvidia, deregulation and infrastructure investment are significant tailwinds. Social media sentiment on X is bullish, with users noting “Trump’s AI plan is rocket fuel for NVDA” and “data center boom = Nvidia wins,” though some warn of “overhype risks.”
Big Tech’s Capex Surge: A Boon for Nvidia
Alphabet’s announcement of a $10 billion capex increase for 2025, raising its total to $85 billion, underscores a broader trend of big tech investing heavily in AI infrastructure:
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Alphabet’s Move: The $85 billion capex, up from $75 billion, targets data center expansions and AI model development (e.g., Gemini 2.5 Pro), driving demand for Nvidia’s GPUs, per CFO Anat Ashkenazi.
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Industry Trend: Microsoft ($65 billion capex in 2024), Amazon ($60 billion), and Meta ($40 billion) are also ramping up AI spending, with analysts expecting similar hikes in 2025, per Goldman Sachs.
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Nvidia’s Benefit: As the leading supplier of AI chips, Nvidia stands to gain from increased data center builds, with its Q1 2025 revenue soaring 69% to $44.1 billion, driven by data center sales of $39.1 billion.
The $563 billion AI datacenter market by 2028, per Citi, suggests sustained demand for Nvidia’s products, supporting its rebound. However, rising capex could pressure big tech margins, potentially impacting market sentiment.
Nvidia’s Rebound: Sustainable or Stalling?
Nvidia’s stock, at $167 with a $4.17 trillion market cap, has surged 171% YTD, driven by:
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AI Dominance: Nvidia’s 90%+ share of the AI GPU market, with H200 and Blackwell chips, fuels growth.
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China Sales: Resumed H20 chip sales to China could add $8-$10 billion annually, offsetting a $4.5 billion Q1 write-down.
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Earnings Strength: Q2 earnings (August 27) are expected at $47 billion, up 15% year-over-year, with gross margins near 75%.
Technical Analysis
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Support/Resistance: Support at $150 (50-day moving average), resistance at $190 (2024 high).
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RSI: At 68, indicating room for upside before overbought conditions (above 70).
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Volume: Spiked to 6 million shares on July 23, signaling strong investor interest.
Bull Case
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AI Growth: The $563 billion AI datacenter market by 2028 supports Nvidia’s long-term growth, with analysts like Wedbush forecasting $367 billion in data center revenue by 2028.
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Policy Tailwinds: Trump’s deregulation and infrastructure focus could drive 20%+ annual revenue growth, per Morgan Stanley.
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Analyst Targets: Morgan Stanley’s $190 and Loop Capital’s $250 suggest 14-50% upside by year-end.
Bear Case
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Valuation Risks: Nvidia’s 32x forward P/E, above the S&P 500’s 22x, leaves little room for error, per Bloomberg.
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Competition: AMD’s MI308 and Intel’s Gaudi 3 could erode Nvidia’s market share, per JPMorgan.
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External Headwinds: Trump’s tariffs (30% on EU/Mexico, 35% on Canada, effective August 1) and the Israel-Iran conflict (oil at $75/barrel) could trigger a 5-10% S&P 500 pullback to 5,800-6,000, impacting Nvidia, per Morgan Stanley.
Nvidia’s rebound appears sustainable in the short term, with potential to hit $190-$200 by year-end if Q2 earnings beat and AI demand holds. However, a consolidation around $170-$180 is possible if earnings disappoint or external risks intensify.
Big Tech Capex: A Growing Trend?
Alphabet’s $10 billion capex hike is part of a broader trend:
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Microsoft: Expected to raise 2025 capex to $70-$80 billion, focusing on Azure and AI, per Goldman Sachs.
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Amazon: Likely to increase capex to $65-$70 billion, targeting AWS and generative AI, per Bernstein.
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Meta: Projected to boost capex to $45-$50 billion, driven by AI infrastructure and metaverse investments, per UBS.
This trend, fueled by Trump’s AI plan, supports Nvidia’s growth by increasing demand for its GPUs. However, rising costs could pressure big tech margins, potentially leading to volatility if earnings guidance disappoints.
Trading and Investment Strategies
Short-Term Plays
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Buy Nvidia on Dip: Enter at $150-$155, target $190-$200, stop at $140. A 14-20% gain if Q2 earnings beat or AI momentum continues.
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Buy AMD on Dip: Grab at $170-$180, target $200-$210, stop at $165. An 11-17% gain on AI chip growth.
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Options Straddle: Buy $167 calls/puts on NVDA for Q2 earnings volatility, targeting 200-300% gains if the stock moves 10%+.
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Sector Hedge: Buy XLK ETF at $200, target $220, stop at $190, for diversified tech exposure.
Long-Term Investments
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Hold Nvidia: Buy at $150-$155, target $240-$320 by 2030, for 3-5x upside with AI growth.
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Hold Microsoft: Buy at $450-$460, target $550-$600, for 16-26% upside with cloud/AI growth.
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Hold AMD: Buy at $170-$180, target $220-$250, for 18-39% upside with AI chip expansion.
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Diversify with Tech ETF (XLK): Buy at $200, target $220, stop at $190, for broad tech exposure.
Hedge Strategies
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VIXY ETF: Buy at $15, target $18, stop at $13, to hedge against tariff or earnings volatility.
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SPY ETF Puts: Use puts at $614 to protect against a 5-10% S&P 500 pullback.
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Gold ETF (GLD): Buy at $200, target $220, stop at $190, as a safe-haven hedge.
My Trading Plan
I’m cautiously bullish on Nvidia, seeing $190-$200 as achievable by year-end 2025 if Q2 earnings beat and Trump’s AI plan drives demand. I’ll buy NVDA at $150-$155, targeting $190-$200, with a $140 stop, and AMD at $170-$180, targeting $200-$210, with a $165 stop. For diversification, I’ll add XLK at $200, targeting $220, with a $190 stop. I’m hedging with VIXY at $15, targeting $18, and keeping 20% cash to seize dips if tariffs (30% on EU/Mexico, 35% on Canada) or geopolitical tensions (Israel-Iran conflict) escalate. I’ll monitor Q2 earnings from Microsoft (July 29), Amazon (August 1), and trade policy updates for cues.
Key Metrics
The Bigger Picture
Trump’s AI Action Plan, with its focus on deregulation and infrastructure, is a powerful catalyst for Nvidia, reinforcing its 171% YTD rally and $4.17 trillion market cap. Alphabet’s $10 billion capex hike, alongside expected increases from Microsoft, Amazon, and Meta, signals robust demand for Nvidia’s AI chips, supporting a sustainable rebound. However, high valuations (32x P/E), competition from AMD and Intel, and risks like tariffs and geopolitical tensions could trigger a 5-10% pullback, potentially consolidating Nvidia around $170-$180. Investors should buy NVDA and AMD on dips for short-term gains, diversify with XLK for tech exposure, and hedge with VIXY or GLD to manage volatility. The AI boom is roaring—play it smart to win big.
Is Nvidia’s rally sustainable? Are you betting on Trump’s AI plan or hedging for a dip? Share your strategy below! 🎁
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