Nvidia stock is stuck in a rut despite the AI spending blitz

Shares of Nvidia $NVDA have lingered in a narrow trading range for months, even as global capital expenditures on artificial intelligence infrastructure continue to climb to record levels.

After hitting record highs in late 2025, the chipmaker's stock fell nearly 2% on Friday morning, rounding off a muted six months. Nvidia's gained just under 2% since August, barely outpacing broader market indexes. By contrast, chipmakers TSMC $TSM and AMD are trading around 52% and 12% higher over the same period, respectively.

Big Tech firms such as Meta $META Platforms, Alphabet $GOOGL, Microsoft $MSFT, and Amazon $AMZN are projected to spend more than $600 billion on AI infrastructure in 2026, a continuation of a multi-year surge in corporate investment in machine-learning compute and data centers, Bloomberg reported Friday.

Analysts say the disconnect reflects a broader recalibration among investors of how much future AI spending should be priced into equities, even for companies at the center of the boom.

“There is perhaps growing concern that the ultimate revenue from AI will simply not keep up with the capex spend that’s been announced,” JoAnne Feeney at Advisors Capital Management told Bloomberg.

Despite robust demand for Nvidia’s chips — and revenue projections that remain well above most rivals — valuation multiples have compressed. Nvidia now trades at roughly 24 times projected profits, roughly in line with the Nasdaq $NDAQ-100 and only modestly above the S&P 500 — a discount by historic standards for a high-growth AI stocks.

Investors have been left waiting for fresh earnings guidance to break the stalemate. Nvidia’s next quarterly report, due after the market closes Feb. 25, is widely viewed as a key catalyst that could determine whether the stock breaks out of its range or stays stuck.

AI's reality check

Market watchers point to several factors behind the stagnation.

After years of accelerated capex, analysts warn that growth in technology infrastructure spending could cool, reducing the pace of orders for data-center chips.

“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,” UBS analysts wrote in a Feb 10 note.

Back in November, Stifel analyst Ruben Roy foreshadowed something similar, warning that persistent capex worries could weigh on Nvidia’s performance.

“The concern that AI infrastructure spending growth is not sustainable is not likely to ebb,” he told Reuters.

Some investors are also worried that the massive sums being committed to AI may deliver slower returns than expected, especially as companies build out expensive facilities and power infrastructure. Plus, chipmaking competition is heating up: Google’s TPU teams and startups developing AI processors are creating alternatives to Nvidia’s dominant GPUs, adding pressure to long-term expectations, Barron's reported Friday.

Still, many Wall Street strategists remain constructive on Nvidia’s position in the sector. Bullish forecasts argue that strong fundamentals — including high revenue growth and the company’s entrenched role supplying the backbone of large-scale AI systems — justify patience.

“Given middling stock performance, supply chain signals that remain bullish, and a management team that seems frustrated with the prevailing doubts around growth and margin sustainability, the earnings set-up here seems positive — especially as we head toward GTC next month,” UBS analyst Timothy Arcuri said in a Wednesday note, who recently reiterated a Buy rating and raised his price target on Nvidia.

With AI spending on track to remain a defining element of global technology strategy, the question for markets now is whether Nvidia’s share price will finally catch up to its narrative — or if investors are simply assigning a higher bar for proof of profitable returns.