Nvidia stock (NASDAQ: NVDA) is lagging the semiconductor rally despite another blockbuster quarter from the world’s most important AI chipmaker.
The paradox is hard to ignore because Nvidia just reported 85% revenue growth, guided for about $91 billion in revenue next quarter and chief executive Jensen Huang described the AI buildout as “the largest infrastructure expansion in human history.”
Yet the stock is up only about 12% in 2026, while broader chip benchmarks have surged.
Beyond Nvidia’s shadow
The semiconductor trade is still roaring. It has simply moved beyond Nvidia.
Memory names have become the market’s new favourites as Micron and Sandisk have surged as investors bet that AI data centres will need not only GPUs, but vast amounts of memory, storage and networking capacity.
The VanEck Semiconductor ETF is up more than 80% this year, while the PHLX Semiconductor Index has also delivered a historic rally.
That makes Nvidia’s relative underperformance striking.
This is not a weak company being punished for poor execution, but a great company being valued more cautiously because investors are questioning how much upside is left after years of extraordinary gains.
According to Barron, Nvidia trades at about 20.2 times forward earnings, below the semiconductor index average of 26.8 times.
That discount shows that investors still respect Nvidia’s dominance, but they are no longer willing to pay peak multiples for it.
The rally has broadened into infrastructure names, custom silicon, memory and networking.
The hyperscalers are building their own exits
The biggest risk to Nvidia is that the largest buyers become more disciplined.
Microsoft and Meta are working on proprietary AI chips to reduce dependence on Nvidia. Amazon’s Trainium and Google’s TPUs are gaining traction as cheaper alternatives for some workloads.
That does not mean they replace Nvidia overnight. It does mean Nvidia’s customers are actively building negotiating leverage.
Wedbush analyst Matt Bryson told Barron’s that there is growing demand for alternative solutions because “there are all these alternatives.”
Mizuho’s Lloyd Walmsley was more cautious, saying “a lot remains unknown today” about how far in-house silicon can go.
The bull case is still powerful. UBS analyst Timothy Arcuri has argued that Nvidia has built a formidable moat around its hardware, software and networking ecosystem.
But even that argument now comes with a caveat.
Arcuri has also flagged the possibility that investors may be underestimating the opportunity for AMD and server CPUs as agentic AI changes the balance of computing workloads.
Goldman Sachs analyst James Schneider has made a similar point from another angle.
His team sees upside for companies such as Marvell from higher hyperscaler capital expenditure, optical networking demand and custom chip opportunities.
Nvidia is not facing a collapse, but the AI hardware boom is no longer its alone to command.
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