By Andrew Mackie
Publication Date: 2025-12-26 08:27:00
Image source: Getty Images
Nvidia (NASDAQ: NVDA) stock has been on a tear over the past three years, fuelled by the AI boom. In late October, it became the first publicly traded company to surpass a $5trn market capitalisation. Since hitting that milestone, the stock has dropped sharply. But even today, it trades at an eye-watering 33 times sales, not earnings. So how likely is it to repeat the same performance in 2026?
Hyperscalers driving AI demand
There’s no doubt that the boom in AI infrastructure is being driven by hyperscalers. Companies such as Google, Microsoft, and Meta are spending hundreds of billions to build data centres and AI labs, with high-end GPU chips forming the hardware backbone.
On paper, it looks incredible – the GPU maker effectively dominates the market for AI chips, and demand appears endless.
From cash flow to debt
But here’s the catch: the current AI build-out is very different from the tech expansion of the 2010s. Back then, hyperscalers grew rapidly using their enormous cash flow reserves, leveraging infrastructure that was already in place.
Netflix, for example, could piggyback on fibre laid down years earlier during the dotcom bubble, while Microsoft and Google required relatively little new capital. Growth came almost for free.
Today, the story is reversed. AI expansion is being funded not through cash flow but through debt. Oracle’s $300bn data centre plan and SoftBank’s $20bn injection…
