Nvidia Corp. $(NVDA)$ shares jumped 3.33% in morning trading after Microsoft Corp. $(MSFT)$ executives detailed increased spending on equipment needed to offer artificial-intelligence-powered features to corporate customers.
Microsoft reported much higher capital expenditures than expected in its fiscal third-quarter earnings Tuesday afternoon, and executives said in a conference call that they expect the total to grow in the current quarter. "We will continue to invest in our cloud infrastructure, particularly AI-related spend, as we scale to the growing demand driven by customer transformation," Chief Financial Officer Amy Hood said in the call.
Hood said that capital expenditures reached $7.8 billion in the fiscal third quarter, more than a billion dollars higher than the $6.57 billion expected by analysts, according to FactSet. Hood also guided for "capital expenditures to have a material sequential impact on a dollar basis driven by investments in Azure AI infrastructure."
Nvidia is seen as a leader in equipment for AI systems, with Chief Executive Jensen Huang saying last month that he expects AI revenue to grow from "tiny, tiny, tiny" to "quite large" in the next 12 months.
Nvidia shares may also have been helped by commentary from Texas Instruments Inc. executives, who gave some insight into a potential turnaround in the semiconductor market Tuesday despite a weaker-than-expected forecast. Microsoft shares were 7.5% higher in premarket trading following stronger earnings and guidance than Wall Street expected.