Nvidia Stalls as $600 Billion AI Capex Fails to Lift Shares

This article first appeared on GuruFocus.

Nvidia (NASDAQ:NVDA) is sitting at the center of the AI infrastructure buildout, yet its share price has stalled even as hyperscalers continue to open the spending taps. The stock has risen less than 1% since the start of the fourth quarter and has largely moved sideways after reaching a record high in late October. That marks a sharp change in tempo from 2025, when Nvidia advanced nearly 40% following two consecutive years of triple-digit percentage gains. Even with Meta Platforms (NASDAQ:META), Alphabet (GOOG), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) projected to push capital expenditures beyond $600 billion in 2026, the incremental spending has not translated into renewed upside for Nvidia, as investors appear to be weighing whether AI revenue will scale in line with the capital being deployed.

Some of the hesitation may come down to durability. JoAnne Feeney of Advisors Capital Management noted that accelerating capital expenditures could pull forward the point at which the market reaches satiation, potentially leading hyperscalers to pause and digest new compute capacity. At the same time, the cyclical character of the semiconductor industry is resurfacing in valuation discussions. Revenue is projected to grow 58% in the current calendar year and 28% in 2027, according to data compiled by Bloomberg, suggesting a deceleration from prior breakneck expansion. UBS strategists led by Ulrike Hoffmann-Burchardi have written that while moderating capex growth could improve perceptions of the companies doing the spending, it may prove a headwind for infrastructure providers operating in the enabling layer.

Valuation now frames the debate. Nvidia trades at roughly 24 times profit estimates, about in line with the Nasdaq 100 and at a slight premium to the S&P 500, yet still below its own five-year average multiple of 38 times. Despite that compression, the market does not seem to be treating the shares as discounted, which may reflect caution about how much of the AI cycle is already embedded in expectations. Estimates for 2026 revenue and earnings have barely shifted since the mega-spending plans were disclosed, as analysts appear to be waiting for greater clarity. That clarity could arrive with Nvidia’s earnings report due Feb. 25 after the close, where guidance on demand and chip orders may determine whether this period of consolidation extends or sentiment begins to turn.