As Big Tech continues to report record top line results, with similarly jaw-dropping capex growth, how much further can we go?
Nov 12, 2025
On October 29th, 2025, NVIDIA took the title as the first company ever to hit a five trillion dollar market capitalization. Just ten years ago, a headline like that would seem completely unthinkable. Back then, gaming and personal compute was making up by far the largest segment of NVIDIA's revenue. Contrast that to today, where gaming brings in less than 10% of what their Data Center segment does, and it's easy to see just how far they have come.
NVIDIA's $5 trillion market cap reflects a twelve-fold share price increase since the launch of ChatGPT in late 2022. When you read numbers like these it likely raises a couple of questions: Is this simply the logical reward for being the backbone of a new global AI boom? Or is it the peak of a valuation bubble that depends on, still mostly unseen, productivity returns?
The AI Spending Frenzy is Real
Across the major players, the headline numbers vary but the strategy is consistent: huge revenue growth paired with escalating capital expenditure and AI-driven infrastructure investment. On Oct 29th 2025, both Alphabet (Google) and Meta (Facebook) reported earnings: Meta reported Q3 revenue of $51.24 billion, up 26% year-over-year, while Alphabet reported Q3 revenue of $102.35 billion (first quarter in the company's history with a top line result exceeding $100 billion), up 16% year-over-year. The growth engine of Big Tech clearly remains strong, but the cost base is expanding rapidly. AI is not cheap. Meta projects capital expenditures in 2025 of around $70-72 billion and warn 2026's expenses will rise further. Meanwhile Alphabet raised its 2025 capex outlook to $91-93 billion (vs just $52.5 billion in 2024). Microsoft’s capital expenditure exceeded $55 billion year-to-date, largely tied to Azure expansion. Analysts expect aggregate AI-related capex across the S&P 500 to exceed $400 billion in 2025, double the level of just two years ago.
From these numbers one can infer that much of NVIDIA's valuation uptick reflects the ripple effects of these companies being willing, and seemingly forced, to spend big to keep up in AI. For all this investment, returns remain uncertain. As Reuters analysts note, the real test will be the rate at which these infrastructure bets convert into sustainable profits, not just revenue growth or investment announcements. Many investors are betting on these huge increases in capex eventually leveling off/decreasing. When big tech eventually finds itself at this point: what will the bottom line look like for NVIDIA?
Are the deals looking a little circular?
The scale of this spending wave illustrates why Nvidia’s valuation has swelled so rapidly. The world’s largest technology companies are simultaneously customers, investors, and competitors in AI infrastructure, an arrangement that channels enormous sums into Nvidia’s ecosystem. Bloomberg reporting last month detailed how OpenAI, AMD, and Oracle have structured multibillion-dollar “circular deals,” where financing, chip purchases, and equity stakes loop back on themselves. Nvidia has agreed to invest $100 billion in OpenAI, which in turn will populate its new data centers with Nvidia chips; Oracle is building facilities for OpenAI using Nvidia hardware; and AMD has offered OpenAI the right to buy shares as part of its own supply partnership.
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For now, Nvidia stands as both symbol and beneficiary of the AI revolution, the company that made machine learning tangible through silicon. Its $5 trillion moment is a testament to just how far they have come since the old days.
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