Behind Nvidia’s Record Run: A Texas Data Center Deal and a New Way to Value AI Chips

Nvidia’s stock punched through to a fresh 52-week high on Monday, touching €186.24 in some trades and €186.20 in others, before easing to €185.32 on Tuesday morning. The 68% gain over the past twelve months reflects a market that is pricing in not just a strong quarter, but a fundamental reshaping of how the company’s future profits are measured.

The rally, which added roughly 10% in the past week alone, comes as Nvidia pushes deeper into the physical infrastructure of artificial intelligence. The chipmaker has committed more than $40 billion in capital this year alone, spreading bets across the AI ecosystem rather than relying on a single winner.

The $2.1 Billion Texas Partnership

A key piece of that spending is a newly disclosed agreement with data-center operator IREN. The two companies plan to build up to five gigawatts of AI infrastructure, anchored at IREN’s Sweetwater campus in Texas. Under the deal, Nvidia secures the right to acquire up to 30 million IREN shares at $70 each — a potential investment of roughly $2.1 billion.

Alongside the equity stake, the partners signed a multi-billion-dollar cloud-service contract. IREN will install Nvidia’s latest Blackwell systems at its Childress facility, ensuring a ready home for the company’s next-generation chips. The arrangement gives Nvidia both financial exposure and guaranteed capacity for its hardware.

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This is far from Nvidia’s only infrastructure bet. Other commitments this year include up to $3.2 billion for Corning to expand U.S. production of optical connectors, roughly $2 billion each for Marvell Technology, Lumentum and Coherent, and $2 billion stakes in cloud providers CoreWeave and the Nebius Group. A separate $30 billion participation in OpenAI rounds out the portfolio.

A New Yardstick for Valuations

Wells Fargo raised its price target on Nvidia to $315 on Tuesday, reinforcing a buy recommendation. The analysts built their case on a novel valuation model: instead of forecasting chip unit sales, they now calculate the world’s total installed data-center capacity in gigawatts. The bank estimates that capacity will nearly triple over the next three years, making Nvidia’s addressable market far larger than simple chip counts suggest.

UBS also maintains a buy rating, though with a more conservative target of $245, pointing to sustained demand for AI hardware.

Tying Customers to the Ecosystem

Last week, Nvidia made available a free software tool called Fleet Intelligence, an agent-based open-source service that lets data-center operators monitor the temperature, power consumption and utilization of their GPU clusters in real time. Cloud providers such as Lambda and infrastructure firm IREN have already adopted it. By giving away the monitoring layer, Nvidia strengthens the stickiness of its hardware — customers that rely on Fleet Intelligence are more likely to stay inside the Nvidia ecosystem as they upgrade to future architectures like Blackwell and Vera Rubin.

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The May 20 Earnings Mark

All eyes are now on May 20, when management will report fiscal first-quarter results. The consensus calls for revenue of roughly $78.6 billion, representing 78% growth year over year. Investors hope for concrete details on the Blackwell production ramp and the pace of infrastructure expansion.

The demand backdrop remains robust. U.S. technology companies are expected to spend up to $700 billion on infrastructure this year alone. CEO Jensen Huang said on Monday that he sees strong demand visibility through the end of 2027, as long as the major cloud providers keep their budgets open. With a $5.33 trillion market cap, Nvidia has cemented its position as the world’s most valuable company — and the numbers suggest that lead is only growing.

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