Nvidia's H100 GPU rental prices have surged nearly 40% since October, from $1.70 to $2.35 per hour, as GPU capacity is effectively sold out across the market. This demand is driven by a wide range of AI applications from companies like ByteDance and Google, and the use of models such as Anthropic's Claude. The tight market extends to Nvidia's newer Blackwell GPUs, with lead times now stretching into mid-2026, defying expectations that next-gen chips would ease pressure on older models.
Behind this supply crunch is massive committed capital from the four largest cloud customers. Alphabet, Microsoft, Meta, and Amazon are expected to spend a combined ~$700 billion on AI infrastructure in 2026 alone. With Nvidia controlling 85-90% of the GPU market, most of that spending flows to the company. Even if chips account for just 20% of total AI infrastructure costs, this implies over $140 billion in annual chip spending from these four customers.
Despite this robust demand backdrop, Nvidia's stock has faced pressure, falling nearly 20% from its October 2025 record high and down about 6.5% year-to-date. This is partly linked to broader geopolitical concerns, particularly tensions involving the US, Israel, and Iran, which have renewed fears over the Strait of Hormuz. Investors worry elevated oil prices could stoke inflation and force central banks to maintain or tighten interest rates, weighing on high-growth tech stocks like Nvidia.
Analysts, however, maintain a positive view. Benchmark reiterated a Buy rating on Nvidia with a $250 price target, citing its expanded partnership with Marvell Technology. Wall Street consensus is a Strong Buy with an average price target of $273.57, implying roughly 55% upside. Nvidia currently trades at 15.7x forward earnings, below its 3-year average of 19.4x and AMD's forward multiple of 18.9x.
Additional catalysts include China's approval for Nvidia to sell H100 chips, which Wells Fargo estimates could be worth $25 billion or more in annual revenue—a figure not included in current guidance. On the product side, the upcoming Vera Rubin platform, expected to ship in the second half of 2026, promises ten times more performance per watt than Blackwell.
