Artificial intelligence chipmaker Nvidia expects the AI boom to keep gaining steam in coming years, estimating that global AI infrastructure spending on real estate and other support systems will total as much as $4 trillion by the end of the decade.
Nvidia CEO Jensen Huang said data center capital spending from the company's tech giant customers including Microsoft and Amazon will probably hit $600 billion this year. He's looking for that to help drive revenue gains for the company, even as Nvidia posted slower growth in the most recent quarter.
“We’re in the beginning of this build-out,” he said this week in discussing the company's second-quarter results.
The estimate from Santa Clara, California-based Nvidia, the first company to achieve a $4 trillion stock market value, comes as the firm expects revenue in the third quarter to be $54 billion, up 56% from $30 billion a year ago — but a more tepid forecast when compared to the company's breakneck growth in recent years.
The second quarter marked Nvidia’s slowest growth since 2023, when the generative AI boom began driving the company's results. The slower growth comes as challenges to AI real estate development gain more attention, including finding the power and water needed to support the data centers used to house the computer technology.
Nvidia faces growing competition from chipmakers including Advanced Micro Devices Inc., while big technology firms including Apple, Amazon and Microsoft are ramping up their own chip manufacturing to stay ahead of AI demand.
Nvidia's chips were primarily used in graphic processors and computer equipment in its early days, but the firm's revenue has soared alongside demand for products including its graphics processing units, which power data centers.
Global AI boom
The company's data center sales — or sales of the chips that power data center technology — rose 56% in the past year to $41.1 billion, representing 88% of the firm's total second-quarter revenue of $46.7 billion.
All told, Huang said he expects industry spending of between $3 trillion and $4 trillion by the end of the decade. That growth, however, faces headwinds largely in the form of the limits on power availability.
Meanwhile, President Donald Trump this month said the government is planning a 100% tax on imported chips. He more recently announced a deal with Nvidia and Advanced Micro Devices Inc. to allow chip exports to China in exchange for a 15% cut of the firms' revenue. The government is also in talks to take a 10% stake in semiconductor company Intel.
Microsoft, Google parent Alphabet and Amazon have warned that limited supplies of AI chips and data center capacity are hampering their ability to capitalize on surging demand for AI and cloud services.
Nvidia has said it plans to spend as much as $500 billion over the next four years building what it calls AI supercomputers entirely in the United States. It has commissioned more than a million square feet of manufacturing space to produce and test its products in factories operated by suppliers in Arizona and Texas.
North Texas recently beat out other sites across the country for the first U.S. location for Nvidia's Taiwan-based electronics manufacturer. Wistron, one of the world's largest electronics manufacturers, plans to establish two AI supercomputing facilities totaling nearly 1.1 million square feet of space at AllianceTexas after landing millions of dollars in tax breaks from the city and county.
Nvidia is also doubling its hub in Austin, Texas, leasing nearly 100,000 square feet in a recently completed office development in the heart of the city's tech scene.
Silicon Valley shopping spree
Nvidia has been gobbling up real estate to support its own role in the industry. The company has spent some $836 million since last year just on buying up properties close to its Santa Clara headquarters.
It purchased its Santa Clara headquarters complex in early 2024 for just shy of $375 million, a portfolio deal spanning seven buildings and roughly 626,500 square feet. It followed that up with a full-building lease in neighboring San Jose late last year.
And in May, it closed a $123 million deal to scoop up an office and research campus several blocks away, a 10-building portfolio deal that added more than 250,000 square feet to the company's global real estate footprint.
Between 2018 and 2022, Nvidia also developed and opened two office buildings called Endeavor and Voyager and totaling about 1.2 million square feet in Santa Clara.
The company's expansion in the region has translated into demand for physical office space to support its growth, fueling optimism across the real estate market that other tech giants will emerge from their own leasing hibernations to help boost the recovering office sector.