Nvidia stock rallied on Wednesday after the chipmaker was named a technology partner for a massive U.S. artificial intelligence infrastructure initiative called Project Stargate.
SoftBank and OpenAI are the lead partners for Stargate, a new company that intends to invest $500 billion over the next four years building AI infrastructure for OpenAI in the United States. SoftBank has financial responsibility for the venture while ChatGPT creator OpenAI has operational responsibility. The initial equity funders in Stargate are SoftBank, OpenAI, Oracle, and investment fund MGX.
Key initial technology partners in Project Stargate are Arm, Microsoft, Nvidia, Oracle and OpenAI.
On the stock market today, Nvidia stock popped 4.4% to close at 147.07.
Arm, Microsoft and Oracle also saw their shares jump on the news.
Other stocks moving higher on enthusiasm for Project Stargate included chip foundry Taiwan Semiconductor Manufacturing and server makers Dell Technologies and Hewlett Packard Enterprise. Data center infrastructure provider Vertiv also gapped up on the news.
"We expect Nvidia will remain a primary beneficiary of forthcoming spend which should if anything drive future revenue expectations higher," Wedbush Securities analyst Matt Bryson said in a client note. He rates Nvidia stock as outperform with a price target of 175.
The Stargate announcement should ease some investor about AI spending, UBS analyst Mayur Ramdhani said in a client note.
"While investors have become increasingly concerned about peak compute demand, this should go a long way to quelling these concerns and potentially adding growth runway for Nvidia beyond calendar 2026," Ramdhani said.
Melius Research analyst Ben Reitzes said the Project Stargate news helps Nvidia's long-term growth story. He maintained his buy rating on Nvidia stock with a price target of 195.
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