Here's Our Nvidia Game Plan as Trade Tensions Ease and FOMO Returns

Things are shaping up for the stock market melt-up to continue Wednesday morning, led by continued strength in Nvidia (NVDA) and softening trade signals from the Trump administration and China. President Trump said he expects to lower Chinese fentanyl tariffs after he meets with Chinese President Xi, and the two will be talking about Nvidia’s Blackwell chips. The latter, which is not baked into current Nvidia expectations, would be an added boost, but it also has the potential to keep Nvidia capacity constrained. We see that driving demand for others, like our own Marvell (MRVL) , as companies, governments, and other institutions look to address their own AI capacity shortages.

Before we talk more about Nvidia, let’s finish discussing why the market is increasingly expecting a U.S.-China trade deal Thursday. We know that the framework in principle has been agreed to, and in addition to Trump’s comments above, a move by China offers another positive signal. We’re referring to China’s announced purchase of 180,000 tons of U.S. soybeans for December-January shipment. This marks the first purchase by China in the current export season and is another signal for an increasingly expected trade deal to be announced Thursday. While we are encouraged, we continue to think the details of any agreement will be what matters most.

Back to Nvidia

Adding to our thinking about continued capacity constraints at Nvidia and an extended demand profile for AI and data center chip demand, Nvidia CEO Jensen Huang shared expectations for $500 billion in AI chip orders and announced plans to build seven new supercomputers for the U.S. government. Nvidia also announced a deal with Palantir (PLTR) in which it will utilize Nvidia chips as part of its Palantir AI Platform, with Lowe’s (LOW) named as an early adopter. A nice partnership win for Nvidia, but a nicer win in the enterprise space for Palantir, and one that supports our PLTR price target increase Monday.

The confluence of those factors led NVDA shares to march higher Tuesday, pushing the company’s market cap past the $4.5 trillion level. Momentum tends to beget momentum, and that has some calling for Nvidia to become the first $5 trillion market-cap company. Given its position in the S&P 500 and Nasdaq Composite, a continued upward trajectory in Nvidia shares and others benefiting from the build-out of the AI ecosystem would carry the market higher.

The next set of data points to watch will be quarterly earnings and capital spending comments from Alphabet (GOOGL) , Meta (META) , and Microsoft (MSFT) after Wednesday’s market close, and Amazon (AMZN) after Thursday’s market close. We’ve discussed comments from Microsoft about its capacity being constrained well into 2026, and how, as part of OpenAI’s restructuring, it agreed to purchase an incremental $250 billion of Azure services, likely extending that capacity crunch.

Here's the thing, coming into this week, capital spending levels in the second half of 2025 were already expected to be higher than those in he first half of the year, and those four companies alone were expected to pump a combined $420 billion into capital expenditures in their upcoming fiscal years vs. the $360 billion forecasted for the current year. Because of the OpenAI-Azure news and Nvidia’s expected $500 billion in AI chip orders and the U.S. government win, the likelihood is we will see sustained capital spending levels at higher levels in 2026 and 2027. Add in Oracle’s (ORCL) massive cloud services backlog, which reached $455 billion, and the multi-year capital spending outlook shared by Huang of $3 trillion-$4 trillion by 2030 is becoming more tangible.

Mindful of FOMO and Froth

As you can imagine, these and other announcements are bringing a fresh round of FOMO to AI and data center-related stocks. As we indicated in our comments about Microsoft yesterday, as investors, we’re all for letting our winners run, but past a certain point, we have to bend the knee to our portfolio discipline. We did just that earlier this week when we took some very profitable Qualcomm (QCOM) chips off the table, even though we ultimately see the shares moving higher over the longer term.

As we did that, we shared that given the Pro Portfolio’s current cash position and other opportunities we are seeing, including some with existing positions, some “tough choices” may have to be made. Much like farmers, the prudent move is to harvest profits from seeds we’ve planted in order to make room for new plantings. Unlike a farmer, we can cull back a portion of a position, like we did with QCOM earlier this week, keeping skin in the game.

What we're getting at is that past a certain point, we will likely need to make a similar move with NVDA and potentially one or two other holdings.

And because we are likely to get this question from a few folks, we recognize NVDA shares have moved past our price target, and we intend to address that as we digest quarterly results this week from Meta, Amazon, Alphabet, and Microsoft. We’ll also revisit a few other targets, such as our one for Arista Networks (ANET) .

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At the time of publication, TheStreet Pro Portfolio was long NVDA, QCOM, AMZN, MSFT, GOOGL, META, PLTR, MRVL and ANET.