Nvidia’s stock has slipped into a rare funk, even as the broader artificial intelligence trade keeps charging ahead. The chipmaker that once defined the AI boom now finds itself trailing its own sector, caught between a record wave of hyperscaler capital expenditure and a structural blow in China that CEO Jensen Huang recently acknowledged as irreversible.
Shares recently changed hands at roughly 170 euros, marking a drop of more than 16% from the 52-week high of €202.50 set on May 14. The decline has pushed the stock below its 50-day moving average of €180.98, though it still holds 3.41% above the longer-term 200-day line of €164.40. The relative strength index sits at 41.7 — indicating cooling momentum but not yet oversold territory — while 30-day annualized volatility of 37.76% suggests traders are bracing for continued big swings in both directions.
The most concrete reason for investor unease came from Huang himself. In unusually direct language, the Nvidia chief conceded that the company has largely ceded the Chinese AI-chip market to domestic rival Huawei. Years of U.S. export restrictions have turned what was once seen as a temporary pause into a permanent loss. China’s demand for AI compute remains enormous, but a homegrown ecosystem is expanding fast, and Beijing is determined to achieve technological self-sufficiency. Worse still for Nvidia, Chinese chipmakers are expected to eventually export their solutions to third markets, threatening the company’s global dominance over the longer haul.
That structural challenge exists alongside an extraordinary spending spree by the world’s largest cloud operators. Amazon, Microsoft, Google and Meta together are projected to invest roughly $725 billion in AI in 2026, a 77% jump from the $410 billion they spent last year. Some analysts see that figure crossing the trillion-dollar mark in 2027. For most of the past two years, that kind of capex trajectory was considered a straightforward tailwind for Nvidia. Now, money managers are questioning whether the returns on such massive outlays will justify the chipmaker’s premium valuation, and some are rotating into other parts of the AI ecosystem — names in infrastructure and supply chains that they believe offer greater upside.
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The result is an odd dynamic: Nvidia’s business continues to grow robustly. The company has guided for around $91 billion in revenue for the summer quarter, a sharp sequential increase. Yet the stock has become the weakest performer in its own chip peer group this year, lagging behind the broader semiconductor ETF as well as rivals such as Micron and Advanced Micro Devices. On a 12-month view, Nvidia still boasts a gain of roughly 26%, beating most non-tech benchmarks. But within the sector, that is no longer enough to lead the pack.
Market technicians point to the breach of the 50-day moving average as a signal that short-term momentum has faded, even though the longer-term uptrend remains intact. The stock’s year-to-date advance of about 5.5% looks anaemic compared to what investors have come to expect from a company that once seemed to double every few quarters. Analysts remain bullish in their consensus 12-month price targets, which sit well above €264, but the market is demanding more than just a growth narrative. It wants proof that the hyperscalers’ spending will yield the kind of returns that once justified Nvidia’s sky-high multiple.
For Nvidia, the next major catalyst will hinge less on whether AI capex continues to climb — that seems all but assured — and more on whether the market retains faith that those dollars will keep flowing through Nvidia’s pipeline. The China exit removes a key growth leg from the story, and the stock’s underperformance suggests the era of automatic premium pricing for any AI-linked name is over. Real order books and execution will decide whether the current pullback remains a harmless pause or becomes something more persistent.
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