• According to Wedbush, Nvidia is expected to have a strong quarter as it continues to invest in AI.
• Technology companies are still in their infancy when it comes to investing in AI hardware, which is driving demand for Nvidia’s AI chips.
• Major customers such as Foxconn and Supermicro are reporting gains from AI, improving Nvidia’s prospects.

According to Wedbush Securities, Nvidia is sure to deliver another strong quarterly result as the AI ​​spending boom is in full swing.

The investment firm, which has dubbed Nvidia founder Jensen Huang the “godfather of AI,” said it remained bullish on the chipmaker ahead of its quarterly earnings report on Aug. 28. The $1 trillion “tidal wave” of AI spending that Wedbush previously predicted is underway, with tech companies still in the early stages of investing in AI hardware, according to Matt Bryson, senior vice president of equity research at Wedbush.

“The reason is that there is still a ton of money being spent on the AI ​​chips that Nvidia makes,” Bryson said in an interview with CNBC on Monday. He noted that the recent sell-off in Nvidia shares was due to concerns that demand for the company’s AI chips was slowing and that there could be problems with Blackwell, its next-generation GPU.

However, some of Nvidia’s biggest customers reported solid earnings, thanks in part to increased investment in AI. Foxconn, a major buyer of Nvidia chips, saw its profits increase 6% last quarter, largely due to “strong growth momentum” in its AI servers. Supermicro, another big Nvidia customer, also reported “great” sales, beating revenue forecasts last quarter despite missing earnings, Bryson noted.

“The recovery is due to a lot of recent data that suggests that AI spending is simply not slowing down,” he added.

The integration of AI into personal devices could also provide a major boost to the semiconductor industry by increasing demand for AI content, Bryson predicted.

Nvidia’s delay in releasing the Blackwell chips also probably “doesn’t matter” in the grand scheme of things, he added, assuming the company is on track to bring the chip to market from now on.

“Everyone is committed to investing in AI through the launch of Blackwell. So you have another year of increased AI spending,” Bryson said. “I still have a buy rating and I think we’ll get another quarter from Nvidia that is again another outperformance and increase. They’ve been doing it consistently. There just doesn’t seem to be any change in the dynamics of their customer base.”

Some analysts are skeptical of Nvidia’s runaway success. The company’s stock has seen a meteoric rise of 3,021 percent over the past five years as more technology companies have moved into the AI ​​space.

However, some analysts believe demand for Nvidia’s chips is bound to slow. Some of Nvidia’s biggest customers, such as Meta, Alphabet and Amazon, are already working on their own chips or investing with other partners, according to one analyst who predicted a long-term decline in the stock.