By David Jagielski, CPA
Publication Date: 2026-04-21 19:00:00
Nvidia (NVDA 1.31%) is the undisputed chip giant these days. Tech companies have been loading up on advanced artificial intelligence (AI) chips in an effort to build the latest and greatest products and services, and that path has often gone through Nvidia.
But many tech companies have also been looking at other options. Some have turned to custom chipmakers to diversify and reduce their dependence on Nvidia, while others, like Amazon, are designing their own chips.
Does this spell trouble for Nvidia’s stock?
Image source: Getty Images.
Could the bull case for investing in Nvidia crumble?
The big reason many investors don’t scoff at paying more than 40 times earnings for Nvidia stock is the expectation that the business will continue growing at an incredible rate, driven by persistently high AI spending among top tech companies. In fact, its price-to-earnings-growth (PEG) multiple of 0.72 suggests it’s an incredibly cheap stock to own, given the growth analysts expect from the business over the next five years.
Five years, however, can feel like an eternity in tech. Five years ago, ChatGPT hadn’t even launched. Generative AI wasn’t the buzz term it is today. Knowing how strong Nvidia’s business will be in the future is by no means certain, not when other companies are working to become less dependent on Nvidia’s high-priced chips.
Investors are buying the stock on the assumption that not only will AI spending remain high in the years ahead, but that the bulk of the…
