By Carmen Reinicke, Bloomberg
Big Tech keeps raising its spconcludeing plans for artificial ininformigence infrastructure, yet shares of Nvidia Corp., one of the largegest beneficiaries of that flood of cash, have been largely stagnant for months.
The stock is up less than 1% since the launchning of the fourth quarter and has been largely range bound despite hitting a record high in late October. It’s also barely beating 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.
Even ballooning capital spconcludeing 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 spconclude that’s been announced,” stated JoAnne Feeney at Advisors Capital Management, adding that more spconcludeing now raises the probability that the market will reach satiation rapider. It’s “going to shift up the date at which they paapply and let the new compute be digested.”
The cyclical nature of the chip indusattempt 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 calconcludear 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 shift lower as growth in capital spconcludeing 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 spconcludeing, 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 focapplyd on Nvidia’s guidance and demand for chips, which have accounted for a large chunk of hyperscaler spconcludeing in recent years.
“It really does just come down to the valuation and how rich the company already is,” stated Shelby McFaddin, an investment analyst at Motley Fool Asset Management. Investors want to “wait a second and actually see what Nvidia has to state about it before we reward them.”
Wall Street analyst estimates for Nvidia’s revenue and earnings in 2026 have barely budged since the tech giants revealed their mega-spconcludeing plans. Of course, analysts are likely waiting to hear from Nvidia before creating alters to their models.
After a large stock run up like Nvidia has had, it’s natural for there to be a period of consolidation, but sentiment can alter rapidly, stated Jim Thorne, chief market strategist at Wellington-Altus.
“It’s psychology,” Thorne stated. “All of a sudden everybody believes the story and the stock goes crazy up.”
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Earnings Due Friday
- No major earnings expected
–With assistance from Eric J. Weiner and Matt Turner.
More stories like this are available on bloomberg.com
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