Why Big Tech’s Boom Isn’t Over Yet
Big Tech can do no wrong. Nvidia announced a $5bn investment in Intel last week – $100bn in OpenAI this week. Nvidia is spending.
Investment is the lifeblood for Big Tech sector sentiment, and the deal overnight continues to feed it. These deals come one on top of another (see below), all of which suggest the outlook for data centres, driven by AI and cloud demand, is endless.
At least, that’s the assumption (the mother of all cock ups) for now.
From the AFR – “Nvidia has signed a letter of intention with OpenAI to ‘invest as much as $US100 billion ($US150 billion) in OpenAI to support new data centres and other artificial intelligence infrastructure, a blockbuster deal that underscores booming demand for tools such as ChatGPT and the computing power needed to make them run…'”
The Nvidia CEO – “This investment and infrastructure partnership mark the next leap forward – deploying 10 gigawatts to power the next era of intelligence.”
Deals breed deals. Nvidia’s investments put all the hyperscalers on notice to get on with it. This is a land grab.
The List of Deals This Year (From AI)
- OpenAI ↔ Nvidia – up to $100B to build/deploy ~10 GW of Nvidia AI datacentres; LOI announced Sep 22, 2025 (first 1 GW targeted for 2H26).
- Nvidia ↔ Intel – $5B NVDA equity stake + multi-gen co-development (custom DC & client CPUs w/ NVLink; U.S. manufacturing angle). Announced Sep 18, 2025.
- OpenAI ↔ Oracle (Project Stargate) – multi-year $300B cloud/AI compute procurement + 4.5 GW new U.S. DC capacity (brings Stargate under development to >5 GW).
- AWS (Georgia) – $11B U.S. DC expansion to support AI/cloud; announced Jan 7–8, 2025.
- Meta (2025 capex) – up to $65B for AI + mega U.S. data centre build (targeting ~2 GW; ~1.3M GPUs by year-end).
- DAMAC (UAE) → U.S. data centres – $20B program targeting TX/OK/LA/OH/IL/IN; announced Jan 2025.
- In January, OpenAI, Oracle and SoftBank said they would invest $US500 billion in 10 gigawatts of computing power in the next four years.
- Microsoft struck a multiyear deal worth almost $US20 billion to get cloud computing power for its AI workloads from Nebius Group and said it would rent $US6.2 billion of computing power in Norway, in addition to the $US30 billion the company said it would spend in just the September quarter to build out its data centres.
What’s Driving This Leg Up in Big Tech?
It was the Fed meeting. Don’t underestimate the positive impact of falling interest rates.
We have just started a new cutting cycle. This is not an ‘event’ that happened and ended. As I describe it, the interest rate trend is like throwing a dye in a swimming pool. It lingers longer. You can’t get rid of it easily. Falling rates are a strong undercurrent for all things financial.
You can tell it’s interest rate cuts – gold is running on the same theme. Some fund managers and central banks have been making big decisions in the last week since the Fed meeting. Those decisions are not ‘moments’. There is big money on the move. In which case, it should linger. Positively, a while longer.
Goldman Sachs strategist overnight – “During the past 40 years, the S&P 500 has generated a 15% median 12-month return when the Fed resumed cutting rates against a backdrop of continued economic growth.”
You might also notice Stephen Miran talking at The Economic Club of New York. He is no nuff nuff. Predictably, he advocates for ‘significantly lower’ interest rates. Don’t write him off. He is influencing the Fed and market thinking, and the trend towards lower rates. Despite his Trump links, the markets like it. More dye in the water.
Is Big Tech Overvalued?
We can do the numbers, but this is not a numbers thing. It’s a sentiment thing. We need to gauge that. We are not going to find out anything that no one else knows in the numbers.
We’re assuming that Big Tech and the markets are overvalued enough that a sentiment change is possible. Nothing is cheap at the moment. So we’re alert and never comfortable.
Is the Big Tech Trend Higher in the Long Term?
Yes, we think so. Unless that changes.
For now, we assume this is a revolution that has decades to run. In which case, it’s not going to simply end. Any correction should be bought. It’s like April. Trump destroyed the market for a moment, but when it turned, we bought back the same stocks. Because this theme has deep roots.
If we sell, we will do so because we see the opportunity to buy back into the same theme lower down. On what we assume now, we’re unlikely to be declaring that the Big Tech theme is over anytime in my lifetime (my lifetime might be a bit shorter than yours). In which case, we expect to be trading it to maximise the opportunity, not because it’s over.
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