Analyst Says Concerns About NVIDIA (NVDA) ‘Circle of CapEx Spending’ Are Not ‘Accurate’

We recently published Top 10 Trending Stocks as Famous Billionaire Predicts Massive AI Stock Rally Before Bubble Burst. NVIDIA Corp (NASDAQ:NVDA) is one of the trending stocks.

Kevin Hincks from Charles Schwab said in a recent program on Schwab Network that market concerns about NVIDIA Corp (NASDAQ:NVDA) investments and the concentration of customers do not hold much weight.

“One analyst is getting slightly negative on NVIDIA Corp (NASDAQ:NVDA) because he just thinks this circle of capex spending and the concentration, he’s worried about it. Now, I don’t think that’s accurate. I think NVIDIA Corp (NASDAQ:NVDA) is still in the early stages and I think the fact that they’re investing in broader companies and getting involved in the other aspects of AI shows that Jensen Wong is making investments in the whole spectrum of AI, not just selling the chips. And I think that is such a smart thing for him to do. Now, critics are going to say he’s going around in a circle, right? He’s investing in the companies, they’re investing in buying his chips, and he keeps investing, but I think they see the whole pie of AI getting bigger and that’s why he wants to be involved. I think it’s a smart move and I think that’s why people continue to get more and more bullish on this name.”

Photo by Javier Esteban on Unsplash

The current AI boom cycle stems from spending by major tech companies, and Nvidia is the biggest beneficiary of this spending. In Q2 FY2026, three direct customers accounted for 23%, 19%, and 14% of NVDA’s accounts receivable. Almost all of the company’s revenue comes from AI-related infrastructure spending. In the latest quarter, $41.3 billion of the $46.7 billion revenue came from these clients. The music could stop for Nvidia if these major companies decide to slow down their spending amid a lack of ROI. If investors sense a weakness in CapEx spending, and the market begins to waver, NVDA stock price would be the first to see its impact.

Baird Chautauqua International and Global Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2025 investor letter:

“NVIDIA Corporation (NASDAQ:NVDA) reported first quarter results that were extremely solid. The company took a write-down on China-specific datacenter products and flushed out any future China contributions from their guidance, following the new export restrictions introduced in April. Demand commentary ex China was extremely encouraging—Nvidia is outgrowing expectations despite supply constraints and outgrowing competing ASIC products by a large margin. We have been underweight Nvidia relative to the benchmark, which was up 46% in the quarter, given our short-to medium-term concerns that the feverish AI datacenter build may be resulting in overcapacity, which has not come to bear.”

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Disclosure: None. This article is originally published at Insider Monkey.