By Daniel Sparks
Publication Date: 2026-02-17 04:46:00
Investors are worried about the sustainability of the AI boom and whether intensifying competition poses a threat.
Year to date, Nvidia (NVDA 2.21%) is down 2% even as the S&P 500‘s returns have been about flat. What gives? After all, Nvidia’s financial performance recently has been astounding. The company reported accelerating top-line growth in its most recent quarter (fiscal Q3) as its earnings soared. Even more, Nvidia guided for very strong fiscal fourth-quarter results.
And there’s another reason to be bullish. Tech giants, including Amazon, Alphabet, Microsoft, and Meta Platforms, have announced massive capital expenditure plans. Specifically, they expect to spend big on AI (artificial intelligence) — Nvidia’s bread and butter. This should be a boon for Nvidia’s sales in the near term. Further, it shows that a slowdown in demand for AI chips is unlikely — at least not anytime soon.
Is Nvidia stock’s recent underperformance a red flag, or is this a buying opportunity?
Image source: Getty Images.
An AI scare
2026 has been marked by significant investor unease regarding AI. Yes, a handful of tech giants have announced plans to invest aggressively in AI, but the sheer scale of these commitments is somewhat concerning.
Amazon, for instance, said it expects to spend about $200 billion, yet its trailing-12-month free cash flow was just $11.2 billion. This suggests Amazon expects its free cash flow, or its cash flow from operations less capital expenditures, to be deep…