Elon Musk Delivers Fantastic News for Nvidia Stock Investors! | SPCX Stock Analysis | NVDA Stock

SpaceX held its first ever conference call with Wall Street analyst in its first ever earnings report as a publicly traded company. And in that report, Elon Musk delivered great news for Nvidia stock investors, saying that SpaceX will build its AI services exclusively on Nvidia systems. So, I wanted to detail this announcement and what it could mean for Nvidia stock investors. >> I want to thank the Mly Fool for sponsoring this video. Visit full.com/parkkev for the 10 best stocks to buy now. >> Elon Musk went on to say that we think the Vera Rubin architecture is the best architecture. We think it's the best AI computer and we value greatly our close cooperation and partnership on many levels with Nvidia. So, we are exclusive to Nvidia. Interestingly, the CEO expects to end the year with more than 2 gawatts of compute and anticipates having closer to 10 gawatts of computing capacity by the end of next year. The 10 gawatt would truly be a remarkable growth rate from the current levels the company is at. And to get a better understanding of the current levels in its quarterly report, its first ever quarterly report, SpaceX reported having 1.4 4 gawatt of computing capacity as of June 30th, 2026. So going up another 600 megawatt to 2 gawatt by the end of this year and then going up nearly 5x from that point to 10 gawatt. That would be a remarkable amount of increase. Already in its most recently completed quarter, the company spent $15.8 8 billion on AI capital expenditures. For the 6 months ended June 30th, it was 23.5 billion. So the rate of spending accelerated aggressively and according to those forecasts provided by Elon Musk, the rate of spending will likely increase, especially now that SpaceX is a publicly traded company and Elon Musk has the currency of SpaceX stock that he can sell to retail investors who are gobbling up shares as quickly as they can. The IPO was the most popular IPO in history and the valuation of SpaceX is still above a trillion. Even after this decline, the valuation is still very very rich. And so I think the company will take the opportunity to raise capital either borrowing money or selling more stock in order to build out this AI infrastructure that Elon Musk is very optimistic about. And that's great news for Nvidia stock investors because Nvidia will benefit from this buildout. Nvidia's GPUs as Elon Musk even mentioned the Vera Rubin architecture is bestin-class. If you want the best of the best, you go with Nvidia. If you want more value options, if you want more affordability, you go with other providers that are also offering you GPUs and accelerated computing. But you're not going to get the best in class. You're not going to be the best of the best. Elon Musk with SpaceX wants the company to invest in the best of the best to catch up because Grock, it's AI, Chatbot, it's AI. SpaceX is arguably in fourth place at best behind chat GPT, Anthropic, and Google's Gemini. And you can argue it's even uh behind fourth place as well. uh so it needs to catch up and it wants to spend the money in order to do so. So this was pretty positive news for Nvidia and the stock price is reacting strongly. It's up over 4.5% on this news. It's now at above $221 per share and of course I'm happy about that. Nvidia is the largest position in my portfolio. I've been ranking Nvidia as one of the best 10 stocks you can buy in 2026. And so I'm happy to see the share price reacting positively. But even after this recent increase, Nvidia stock is still relatively cheap. It's trading at a forward price to earnings ratio of just 17.2. This is near the cheapest this stock has been according to this valuation ratio going back several years. And it looks cheap regardless of comparisons. I mean you can compare Nvidia to AMD. AMD stock is trading at more than twice the valuation of Nvidia. You can compare Nvidia to other AI companies which almost all of them are trading at more expensive valuations than Nvidia. We can even look at a discounted cash flow model that I created for Nvidia that makes the stock look relatively cheap. In fact, I calculated a fair value for Nvidia stock at $300 per share. And even after today's increase at 221, you can see it's considerably undervalued. And some of the reasons investors have been bearish on Nvidia is the proliferating competition. As I mentioned, the lowerpriced options that are being created and increasingly created by companies like Alphabet, Amazon, and AMD. That's increasing concerns from investors that maybe Nvidia might not have as much pricing power because it can't price its product too significantly above what those lower priced options are offering. And then of course industry economics have not looked good in recent months. The pricing competition from these large language model providers lowering and lowering the token cost, lowering and lowering the token price. And then you've got competition from open-source Chinese models that have been competitively not that far behind and significantly cheaper to use for enterprises. And so the industry economics is also concerning investors because if the industry that Nvidia is selling its product into is not very profitable, they won't have as much money and it won't be as lucrative and they won't purchase as many of Nvidia's products. And so those bearish factors have weighed on Nvidia stock which has trailed its semiconductor peers. Right? Micron stock is up hundreds of percent. AMD stock is up over a 100%. Intel stock is up significantly and on and on. All these companies are up. All these other semiconductor companies are up much more significantly than Nvidia in 2026. So this news from Elon Musk was definitely great news for Nvidia stock investors as the company's share price trails that of others. But I think it's a great buying opportunity for investors and I ranked Nvidia as one of the top stocks you can buy and I will reiterate that rating today on August 5th after these developments came from Elon Musk. By the way, let me remind you of our channel membership program where you get tons of benefits including member exclusive videos and live coverage for earnings results. I will be going live to cover Nvidia's earnings results when they are released. That will be exclusive to channel members. So, if you want access to that live earnings coverage, consider joining our channel. Less than $5 a month. I think you'll truly appreciate the value we provide.