Nvidia, AMD Surge as BofA Says AI Spending Has Staying Power
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
artificial-intelligencesemiconductors
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Bank of America analysts highlighted the durability of corporate artificial intelligence spending in a note on 26 May 2026, asserting the investment cycle has long-term staying power. The assessment arrived during a volatile session for leading AI chipmakers, creating a stark divergence in their performance. Nvidia stock traded at $215.33, down 3.64% on the day. Advanced Micro Devices, however, surged to $467.51, a gain of 4.45% as of 13:08 UTC today.
The debate over AI investment sustainability has intensified as the initial wave of hyperscaler capital expenditure shows early signs of moderation. The last major technology investment super-cycle, driven by cloud computing from 2016-2022, saw infrastructure spending grow at a compound annual rate of over 24%. Current macro conditions are defined by the Federal Reserve holding its policy rate steady at a 4.75%-5.00% range, creating a higher cost of capital for long-duration growth projects.
The catalyst for renewed focus is the impending second-quarter earnings season. Corporate guidance on AI-related capital expenditure will be scrutinized for evidence of a durable, enterprise-driven demand wave beyond initial cloud provider builds. Bank of America's note signals that analyst consensus may be underestimating the breadth of adoption across traditional industries like automotive, healthcare, and financial services, which could extend the cycle.
Market data from the session reveals a significant split in performance among AI hardware leaders. Nvidia's intraday range was $214.86 to $221.01, indicating selling pressure that kept it from recovering to session highs. In contrast, AMD traded between $461.71 and $481.37, demonstrating consistent buying interest that pushed it near its daily peak. The 8.09 percentage point spread between AMD's gain and Nvidia's decline is unusually wide for these correlated stocks.
The divergence is further illustrated by comparing their year-to-date performance through the prior session. Nvidia had appreciated approximately 38% for the year, while AMD was up roughly 42%. This underscores how both had been beneficiaries of the AI rally, making their decoupled moves on this news notable. The broader Philadelphia Semiconductor Index (SOX) was modestly higher, suggesting the activity was concentrated in specific names rather than a sector-wide rotation.
| Metric | Nvidia (NVDA) | AMD (AMD) |
|---|---|---|
| Price (26 May 13:08 UTC) | $215.33 | $467.51 |
| Daily Change | -3.64% | +4.45% |
| YTD Change (approx.) | +38% | +42% |
Bank of America's stance suggests a second-order effect where beneficiaries extend beyond primary compute providers to the broader AI infrastructure ecosystem. Companies like Marvell Technology, supplying custom AI networking and silicon, and Broadcom, a leader in AI networking switches and custom accelerators, stand to gain from expanded enterprise deployments. Software and services firms enabling AI implementation, such as ServiceNow and Palantir, may also see sustained demand.
A key counter-argument is that elevated spending levels could pressure near-term corporate margins, potentially leading to a backlash from cost-focused management teams if tangible productivity gains are delayed. This risk is most acute for capital-intensive industries embarking on digital transformation. Flow data indicates institutional investors are rotating within the AI theme, potentially taking profits in Nvidia after its historic run and increasing exposure to perceived later-cycle winners like AMD and infrastructure software providers.
Two imminent catalysts will test the staying power thesis. First are earnings reports from major cloud providers Amazon, Microsoft, and Google in late July 2026, where AI capex guidance will be paramount. Second is the Fed's policy meeting on 17 June 2026; a shift toward a more hawkish stance could increase discount rates and dampen the appeal of long-duration tech investments.
Technical levels to monitor include Nvidia's 50-day moving average near $208, which could serve as support, and AMD's recent high around $485, which represents immediate resistance. A sustained break above $500 for AMD would likely confirm a new leadership phase within the semiconductor group. Market participants will also watch for commentary from Taiwan Semiconductor Manufacturing Company's earnings call in mid-July for forward-looking foundry demand indicators.
For retail investors, durable AI spending implies the investment theme has moved past speculative hype into a multi-year growth phase with identifiable revenue streams. This potentially reduces volatility but also means the largest gains from initial discovery may have passed. It shifts the focus to identifying companies with competitive moats in specific AI application layers, such as data management, model training, or inference hardware, rather than betting on the overall trend. Due diligence on valuation and path to profitability becomes more critical.
The current AI investment cycle differs from the late-1990s dot-com boom in several key aspects. Today's leading companies, like Nvidia and Microsoft, generate massive, profitable revenue streams from AI products, unlike the pre-revenue internet startups of that era. Infrastructure spending is driven by established cloud giants with fortress balance sheets. The total addressable market is underpinned by tangible efficiency gains across existing industries, not solely speculative future applications. However, parallels exist in the rapid pace of capital allocation and high valuations for pure-play AI firms.
Sector rotations within semiconductors are common during extended technology cycles. During the smartphone boom from 2010-2015, leadership rotated from initial application processor designers like Qualcomm to memory suppliers like Micron and later to equipment makers like ASML. These rotations often signal the maturation of a cycle's initial phase and the expansion into broader supply chain and enabling technology opportunities. The current divergence between Nvidia and AMD fits a historical pattern where the market begins pricing in a more diversified beneficiary set.
The market is beginning to price in a longer, more diversified AI investment cycle, rotating capital within the sector to capture its expanding scope.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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