Reassessment of AI Spending Impacts Major Tech Stocks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Should l Buy NVDA?
Source: Benzinga
- Market Value Loss: In 2026, major tech companies including Microsoft, Amazon, Nvidia, Apple, and Alphabet saw a combined market value drop of over $1.3 trillion due to a reassessment of AI spending, indicating investor caution regarding elevated capital expenditure plans.
- Semiconductor Industry Outlook: Despite market volatility, the semiconductor sector remains robust, with global chip sales reaching $791.7 billion in 2025 and projected to grow by 26% in 2026, positioning the industry to approach $1 trillion in annual revenue.
- Accelerating Data Center Demand: SIA CEO John Neuffer highlighted that increasing demand for data centers is driving growth in the semiconductor industry, while also noting that cyclical fluctuations are likely to persist, reflecting the dynamic nature of the market.
- Nvidia Earnings Focus: Nvidia is set to report earnings on February 25, 2026, and despite recent stock weakness, analysts like Jim Cramer have dubbed it the “GOAT,” emphasizing its competitive position and resilience in the market.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 182.810
Low
200.00
Averages
264.97
High
352.00
Current: 182.810
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is a full-stack computing infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. The Company’s segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing platforms and artificial intelligence (AI) solutions and software; networking; automotive platforms and autonomous and electric vehicle solutions; Jetson for robotics and other embedded platforms, and DGX Cloud computing services. The Graphics segment includes GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems, and Omniverse Enterprise software for building and operating industrial AI and digital twin applications.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Increased Capital Expenditures: Major tech companies plan to further increase capital expenditures in 2026, primarily for AI infrastructure, which will directly boost Nvidia's GPU sales and solidify its market dominance.
- Surge in Product Demand: CEO Jensen Huang noted that demand for the Blackwell platform data center products is “off the charts,” indicating rapid growth in market demand for Nvidia's AI computing products.
- Record of Exceeding Estimates: Nvidia has surpassed Wall Street's earnings expectations in 20 out of the last 22 quarters, demonstrating strong performance stability and management's clear visibility into future results, with expectations to continue this trend.
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- Increased Capital Expenditures: Major tech companies plan to further increase capital expenditures in 2026, primarily for AI infrastructure, which will directly boost Nvidia's GPU sales and solidify its market dominance.
- Surge in Product Demand: CEO Jensen Huang noted that demand for the Blackwell platform data center products is “off the charts,” indicating rapid growth in market demand for Nvidia's AI computing products.
- Record of Exceeding Estimates: Nvidia has surpassed Wall Street's earnings expectations in 20 out of the last 22 quarters, demonstrating strong performance stability and management's clear visibility into future results, with expectations to continue this trend.
See More
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SEC Filing: The dissolution of the stake was formally communicated through a filing with the Securities and Exchange Commission (SEC), highlighting regulatory compliance in the process.
See More
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- Significant Stock Growth: Nvidia's stock has surged 700% over the past three years, driven by the acceleration of the AI revolution, which has led to double and triple-digit revenue and profit growth, with the latest fiscal year revenue surpassing $130 billion, indicating strong market demand.
- Increased Market Competition: While Nvidia remains a leader in AI chip design, it faces pressure from competitors like AMD and challenges from some customers who produce their own chips, which could impact its market share and future growth potential.
- Investor Confidence Fluctuations: Recently, investors have expressed concerns about the high valuations of AI stocks, leading Nvidia's price-to-earnings ratio to drop to its lowest level in nearly a year; however, AI spending remains robust, with expectations that the market will reach trillions in the coming years.
- Diversified Investment Strategy: Experts recommend that investors choose a variety of quality companies to minimize risk, with Nvidia being an ideal choice for growth-oriented investors, especially at current valuations, potentially providing significant wealth growth opportunities.
See More
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- Investor Concerns: Investors are increasingly worried that advanced AI agents may render traditional user interfaces and subscription models obsolete, raising questions about the future of the software industry.
- Technological Shift: Anthropic highlighted in a blog post that Sonnet 4.6 can use computers like a human, changing the way users interact with traditional software and reducing the need for bespoke connectors, thereby enhancing automation capabilities.
- Industry Impact: With the launch of Sonnet 4.6, the performance threshold for traditional software tasks has been lowered, allowing economically valuable tasks that previously required Opus-class models to be accomplished with Sonnet 4.6, intensifying market competition.
See More
Investors Quietly Reduce Exposure to Semiconductor Stocks
- Valuations at a Tipping Point: Despite significant gains from high-flying stocks like Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD), their stock prices are beginning to exceed the fundamentals, raising investor concerns about growth sustainability and potentially prompting a shift to less risky sectors.
- Earnings Trends Signal Caution: While quarterly reports from major chipmakers show continued revenue growth, guidance for upcoming quarters is more tempered, particularly as Intel (NASDAQ:INTC) faces execution challenges on new process nodes, which may impact its near-term competitiveness and lead investors to rebalance portfolios.
- Macro Factors Shaping Sentiment: Rising interest rates and the potential for tighter monetary policy increase the opportunity cost of holding high-multiple growth stocks, especially in the semiconductor sector, which is sensitive to future earnings growth, leading investors to navigate between high expectations and moderate growth.
- Sector Rotation Trends: Investors are increasingly drawn to sectors like energy, consumer staples, and healthcare, where earnings are less sensitive to economic swings and cash flows are more reliable, indicating a shift in focus from semiconductor stocks after years of tech-led gains, emphasizing risk management and portfolio balance.
See More
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- Optimistic Market Outlook: Bank of America analyst Vivek Arya raised the 2030 market size forecast for AI data center systems from $1.2 trillion to $1.4 trillion, reflecting strong expectations for 2026 cloud capex, thereby boosting confidence in semiconductor stocks.
- Accelerated Growth Projections: The overall data center systems market is expected to grow at a 64% year-over-year rate in 2026, while AI systems are projected to achieve a remarkable 100% growth rate, indicating significant market expansion driven by new accelerator deployments.
- Reduced Supply Risks: Arya noted that the anticipated supply growth for High-Bandwidth Memory (HBM) and Chip-on-Wafer-on-Substrate (CoWoS) in 2026, projected at 75% and 70% year-over-year respectively, has largely been allocated, thus mitigating near-term supply risks and ensuring margin protection.
- Company-Specific Estimates Adjusted: For Nvidia, Arya raised revenue estimates by 7% for fiscal 2027, anticipating $0.5 trillion in sales visibility through 2026, while also adjusting Marvell's revenue estimates post-XConn acquisition, although visibility on next-gen programs remains limited until 2027.
See More
