Nvidia Stock Rises. How Intel Is Boosting the Chips Sector.

Nvidia chips are the favored choice for training artificial-intelligence models. (Courtesy NVIDIA)

Key Points

• Nvidia shares rose, with other chip makers also seeing gains.
• Intel’s positive results boosted the chip sector, forecasting sustained semiconductor demand.
• Wall Street predicts a 63% increase in capital expenditures by cloud-computing businesses this year, though debt financing for AI infrastructure is rising.

Nvidia stock was rising early Friday amid gains in the wider semiconductor sector.

The chip maker’s shares were up 1.9% at $185.63 in early trading. Among rivals, Advanced Micro Devices was up 6.3% and Broadcom was rising 2.6%.

The mood in the chips sector in general could be getting a lift from Intel ‘s upbeat results, after it said semiconductor demand will outpace supply into next year.

Intel shares were up 3.5% in morning trading. Nvidia previously said it would invest $5 billion in the company. Under the arrangement, Intel would build custom central processing units that Nvidia would integrate into its artificial-intelligence infrastructure platforms.

There is little sign of a slowdown in the AI chip boom. Wall Street is forecasting that the largest cloud-computing businesses will increase their capital expenditures by around 63% this year from levels in 2024.

However, there could be some concerns about the increasing reliance on debt to invest. Major banks are preparing a $38 billion debt offering to fund data centers tied to cloud-computing company Oracle , Bloomberg reported. Oracle didn’t immediately respond to a Barron’s request for comment early on Friday.

“While it remains the case that a vast majority of that AI buildout is being financed out of cash flows, debt issuance by the major AI-related firms has begun to pick up with the recent Oracle issuance capturing plenty of headlines,” said Garrett Melson, portfolio strategist at Natixis Investment Managers. “As bubble fears have begun to pick up, this is one of the few yellow flags we’ve seen in the space.”

Write to Adam Clark at adam.clark@barrons.com