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(Bloomberg) — Big Tech keeps raising its spending plans for artificial intelligence infrastructure, yet shares of Nvidia Corp., one of the biggest beneficiaries of that flood of cash, have been largely stagnant for months.
The stock is down more than 1% since the beginning of the fourth quarter and has been largely range bound despite hitting a record high in late October. It’s also lagging the S&P 500 Index to start 2026, a slowdown from Nvidia’s nearly 40% leap in 2025 following two consecutive years of triple-digit percentage gains. Nvidia shares sank as much as 2.6% Friday.
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Even ballooning capital spending from Meta Platforms Inc., Alphabet Inc., Microsoft Corp. and Amazon.com Inc. — estimated to exceed $600 billion in 2026 — hasn’t been enough to meaningfully boost the stock amid increasing anxieties about returns on those investments.
“There is perhaps growing concern that the ultimate revenue from AI will simply not keep up with the capex spend that’s been announced,” said JoAnne Feeney at Advisors Capital Management, adding that more spending now raises the probability that the market will reach satiation faster. It’s “going to move up the date at which they pause and let the new compute be digested.”
The cyclical nature of the chip industry is baked into Nvidia’s valuation, which has compressed as revenue growth is expected to slow in the coming years. Sales are projected to expand 58% in the current calendar year and 28% in 2027, according to data compiled by Bloomberg.
Nvidia shares trade around 24 times profit estimates, roughly in-line with the Nasdaq 100 index and a slight premium to the S&P 500. Even though this price-to-earnings ratio is far below the five-year average for the stock at 38 times, investors aren’t counting it as a discount.
Valuations for infrastructure providers like Nvidia are likely to move lower as growth in capital spending decelerates, according to UBS strategists led by Ulrike Hoffmann-Burchardi.
“Capex growth is likely to moderate from these levels, which could improve investor perceptions of those doing the spending, but is a potential negative for some companies in the enabling layer,” they wrote in a note dated Feb. 10.
The next catalyst for Nvidia shares is its upcoming earnings report, due Feb. 25 after markets close. Investors will be focused on Nvidia’s guidance and demand for chips, which have accounted for a large chunk of hyperscaler spending in recent years.
