Big‑tech giants are steadily upping their budgets for artificial‑intelligence infrastructure, but Nvidia’s stock, one of the biggest beneficiaries of that cash flow, has stayed largely flat for months.
Since the start of the fourth quarter, the shares have slipped more than 1% and have traded in a tight range despite reaching a record high in late October. The stock is lagging the S&P 500 at the beginning of 2026, a slowdown from the nearly 40% jump Nvidia posted in 2025 after two consecutive years of triple‑digit growth. Friday’s decline saw the shares drop as much as 2.6%.
Even the projected capital spend of over $600 billion in 2026 from Meta, Alphabet, Microsoft and Amazon hasn’t been enough to lift the stock, as investors grow uneasy about whether the future revenue from AI will keep pace with the spending that’s already been announced.
“There’s a growing concern that the ultimate revenue from AI will simply not keep up with the capex spend that’s been announced,” said a strategist at Advisors Capital Management. “More spending now raises the probability that the market will reach satiation faster, which could shift the timeline for when investors digest the new compute.”
The chip cycle is baked into Nvidia’s valuation. Forecasts show revenue expanding 58% this calendar year and 28% in 2027, but the price‑to‑earnings ratio of roughly 24 times earnings is still higher than the five‑year average of 38. Investors view the current valuation as a premium to the Nasdaq 100 and a slight edge over the S&P 500, but not a discount.
UBS strategists, led by Ulrike Hoffmann‑Burchardi, warned that capex growth is likely to moderate. That slowdown could improve perceptions of the companies that are spending, but it could be a negative for those in the enabling layer, such as Nvidia.
The next big catalyst for the stock is Nvidia’s earnings announcement on February 25, after the market closes. Analysts will be looking closely at the company’s guidance and the demand for its chips, which have accounted for a large portion of hyperscaler spending in recent years.
After a sharp run‑up, it’s normal for a stock to consolidate, but sentiment can shift quickly. “It’s psychology,” said a chief market strategist at Wellington‑Altus. “All of a sudden everybody believes the story and the stock goes crazy up.” Investors are waiting to see what Nvidia will say before deciding whether to reward the company.
Overall, the market remains cautious, holding back on a new round of enthusiasm until Nvidia’s next earnings report provides more clarity on how its business will keep up with the rapidly growing AI spending.
