Microsoft (MSFT) Plans Increased Capex, Boosting Nvidia (NVDA) Outlook

Microsoft (MSFT) announced that its capital expenditures (capex) will grow year over year in fiscal 2027, driven by high demand for computing power. This indicates strong growth potential for Nvidia (NASDAQ: NVDA), which is projected to benefit from an estimated $1 trillion in data center capex from AI hyperscalers in 2027, up from $650 billion in 2026. Despite trading at a price-to-earnings (P/E) ratio of 21.1, equivalent to the S&P 500 average, Nvidia is expected to see a 42% revenue growth in fiscal 2028. Investors may want to consider buying Nvidia shares before its second-quarter earnings report on August 26, 2023, as it represents a potentially undervalued opportunity.