Nvidia stock surged more than 10% this week as semiconductor sector concerns eased and SpaceX announced it will build data centers exclusively using Nvidia chips, both on Earth and in modified orbital versions.
The rally reversed a prior week of losses driven by investor doubts about AI sector valuations.
The news comes despite reporting that Nvidia is testing lower-memory configurations of its upcoming Rubin Ultra chip due to a global memory shortage.
What happened
Nvidia stock climbed more than 10% over the week as investor concerns about AI sector valuations eased. The Philadelphia Semiconductor Index rose more than 8% over the last five trading days. SpaceX announced during its first earnings call on Tuesday that it will build data centers on Earth and in orbit using exclusively Nvidia's chips, including the Vera Rubin-based NVL72 rackscale system.
Why it matters
Semiconductor stocks had been hit hard the prior week on doubts about whether lofty valuations matched fundamentals; this recovery signals traders have turned more positive on the sector. The SpaceX partnership provides a concrete large-scale use case for Nvidia's hardware. The news comes despite a report that Nvidia is testing lower-memory versions of its upcoming Rubin Ultra chip (192GB and 256GB of HBM) to address a global memory shortage, instead of the originally planned 1TB.
What to watch
AMD stock underperformed despite reporting better-than-anticipated Q2 earnings and an upbeat Q3 outlook on Tuesday, sinking roughly 8% after that report before ending the week up just shy of 2%. AMD stock is up 180% over the last 12 months, while Nvidia shares are up 28% in the same time frame. AMD's Helios rackscale platform is expected to compete directly with Nvidia's NVL72.
Nvidia closed the trading week with a gain exceeding 10%, part of a broader semiconductor sector recovery that saw the Philadelphia Semiconductor Index rise more than 8% over the last five trading days. The bounce reverses a steep prior-week decline driven by investor anxiety over AI sector valuations and whether the companies behind the AI infrastructure buildout could justify their stock prices.
A major catalyst for the recovery came from SpaceX. During the rocket company's first earnings call on Tuesday, Elon Musk announced that SpaceX will construct data centers on Earth and in orbit using exclusively Nvidia hardware. The ground data centers will employ Nvidia's Vera Rubin-based NVL72 rackscale system, with modified versions of the same rack to be launched into orbit around Earth. The commitment represents a large-scale, high-profile endorsement of Nvidia's infrastructure products and provides concrete evidence of demand.
The positive momentum, however, arrives alongside supply-side headwinds. On Thursday, The Information reported that Nvidia is considering reducing the amount of high-bandwidth memory (HBM) in its upcoming Rubin Ultra chip due to a global memory shortage. The original specification called for Rubin Ultra to use 1TB of HBM—equivalent to 1,000GB—but Nvidia is now testing versions with 192GB and 256GB of HBM. For context, Nvidia's current top-of-the-line Rubin chip uses 288GB of HBM. The testing of substantially lower-memory configurations signals that memory constraints are forcing trade-offs in product specifications.
Competition in the rackscale space is also intensifying. Rival chipmaker AMD reported better-than-anticipated Q2 earnings results and an upbeat Q3 outlook on Tuesday, yet the stock fell roughly 8% immediately after, suggesting investors had expected even stronger performance. AMD ended the trading week up just shy of 2%. Over the last 12 months, AMD stock has risen 180%, notably outpacing Nvidia's 28% gain in the same period, driven partly by strength in AMD's CPU business and the upcoming Helios rackscale platform, which is designed to compete directly with Nvidia's NVL72.
Nvidia's strong weekly performance reflects a broader reversal in semiconductor investor sentiment. The prior week had seen the sector take a sharp hit as traders questioned whether AI companies' steep valuations were grounded in real fundamentals and earnings power. The recovery suggests that concerns have eased, at least temporarily, allowing major chip names to recapture losses.
The SpaceX announcement provides a concrete catalyst for that sentiment shift. Elon Musk's commitment to build data centers using only Nvidia hardware—both terrestrial and orbital—anchors Nvidia's dominant position in the AI infrastructure buildout to a high-profile, capital-intensive customer. This gives investors tangible evidence of demand beyond the generalized "AI buildout" narrative that had begun to feel overextended.
Parallel to the rally, Nvidia faces a supply-side challenge that could moderate upside: testing lower-memory configurations of the Rubin Ultra chip signals the company is navigating a genuine global shortage of high-bandwidth memory. The gap between the planned 1TB and tested versions (192GB–256GB) is substantial, suggesting memory constraints are forcing engineering trade-offs. This detail, reported the same week as the stock surge, indicates investors are willing to look past near-term supply friction in favor of longer-term competitive positioning.
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