How AI Companies' Massive Spending Failed to Spark Nvidia Stock Gains

The paradox facing the technology sector has become impossible to ignore: despite record-breaking capital expenditure plans from leading ai companies like Meta, Alphabet, Microsoft, and Amazon—collectively pledging over $600 billion for 2026—Nvidia’s stock has remained largely stagnant. The semiconductor giant, which stands as the primary beneficiary of this artificial intelligence infrastructure boom, has seen its share price gain less than 1% since the fourth quarter began, a stark contrast to its dominant 40% surge throughout 2025.

This disconnect between massive investments and muted stock performance reveals growing skepticism among investors about whether the returns on these colossal spending initiatives will materialize as expected. The challenge facing Nvidia isn’t a lack of AI demand—it’s a crisis of confidence in the economics of AI itself.

The AI Investment Paradox: When Spending Doesn’t Translate to Stock Gains

The fundamental question troubling markets is whether ai companies are investing too aggressively too quickly. JoAnne Feeney from Advisors Capital Management articulated the core concern: “There’s a growing worry that the revenue generated from AI may not keep pace with the announced capital expenditures. Increased spending now could mean the market reaches saturation sooner, prompting companies to pause and absorb the new computing power.”

This observation highlights a critical tension. Ai companies are racing to deploy cutting-edge infrastructure, but the actual use cases and revenue streams to justify these investments remain uncertain. Rather than rewarding Nvidia for being the backbone of this expansion, the market is pricing in the possibility of overinvestment and diminishing returns.

Nvidia’s current valuation reflects this caution. Trading at approximately 24 times projected earnings, the stock aligns with the Nasdaq 100 and sits slightly above the S&P 500, but well below its five-year average of 38 times earnings. Analysts from UBS, led by Ulrike Hoffmann-Burchardi, project that valuations could face further pressure. They noted, “A moderation in capex growth could improve investor sentiment toward the spenders, but may negatively impact some suppliers,” suggesting that even if ai companies moderate their spending, Nvidia and similar chipmakers could bear the brunt.

Growth Forecasts Suggest Cooling Momentum Ahead

While Bloomberg’s analysis projects Nvidia’s revenue will expand 58% in 2026 and 28% in 2027, these figures represent a deceleration from the company’s historical standards. The transition from triple-digit growth rates to double-digit expansion signals a normalization that savvy investors anticipated well before the new year.

The stock’s sluggish performance at the outset of 2026 underscores this reality. Despite remaining near all-time highs reached in late October, Nvidia has essentially traded sideways, suggesting that much of the optimistic narrative around ai companies’ AI buildout may already be priced into the shares.

Market Sentiment Hinges on Execution and Returns

Investment strategists emphasize that confidence will ultimately depend on tangible proof of concept. Shelby McFaddin from Motley Fool Asset Management commented, “Ultimately, it’s about valuation and how much value is already priced in. Investors want to hear from Nvidia before rewarding the stock further.” This sentiment reflects a broader patience among traders—they’re willing to wait for concrete evidence rather than chase momentum.

Jim Thorne, chief market strategist at Wellington-Altus, captured the psychological dimension: “After a significant rally like Nvidia’s, a period of consolidation is normal, but market sentiment can shift quickly. It’s all about psychology—once everyone buys into the story, the stock can soar.” For now, that story appears to have lost momentum.

Competing Demand Signals Within the Semiconductor Ecosystem

Interestingly, Nvidia’s headwinds stand in contrast to some peers. Kioxia Holdings saw its shares surge as strong AI demand boosted its outlook, making it the top-performing major stock in 2026. Applied Materials also surged 11% in premarket trading after issuing a positive sales forecast, signaling robust demand for AI and memory chip equipment. These gains suggest that while investors remain skeptical of the broader AI spending narrative, they’re willing to reward companies positioned in specific segments of the supply chain.

The February 25 Earnings Announcement: A Potential Inflection Point

All eyes are now on Nvidia’s earnings report scheduled for February 25 after market close. This announcement will be critical, as investors are seeking concrete updates on guidance and chip demand—metrics that have directly driven the aggressive capital expenditure programs among cloud providers and major tech conglomerates.

Management’s commentary on ai companies’ willingness to continue aggressive investment, combined with visibility into future orders, could either reinvigorate confidence or validate concerns about saturation. The market’s tepid response to record-breaking spending announcements suggests investors are priced for disappointment, making any positive guidance a potential catalyst.

What’s at Stake for the Broader AI Infrastructure Build

Beyond Nvidia’s stock, this moment carries significance for the entire semiconductor sector. If ai companies’ spending plans face headwinds or if revenue generation lags expectations, the cascading effects could reshape the technology industry’s capital allocation priorities for years. Meanwhile, Anthropic’s recent $30 billion funding raise at a $380 billion valuation, and reports that OpenAI has flagged concerns about DeepSeek’s data extraction tactics, underscore the intensifying competition and resource demands within the AI ecosystem.

The fundamental question remains: Are ai companies investing wisely in infrastructure that will drive lasting returns, or are they caught in a competitive arms race that will ultimately disappoint shareholders? Nvidia’s next earnings call may provide clarity—or simply deepen the uncertainty that has kept its stock in neutral territory despite the most ambitious technology infrastructure buildout in modern history.