As anticipation builds for 2026, Nvidia’s stock is experiencing a downward trend, drawing the attention of investors who are keenly assessing their options. While leading semiconductor stocks such as Taiwan Semiconductor Manufacturing, Broadcom, Advanced Micro Devices, Micron Technology, and Nvidia have remained central to discussions around the artificial intelligence (AI) sector, Nvidia’s shares have underperformed compared to its chip peers throughout 2025.
Investors are now contemplating the future trajectory of Nvidia, particularly as they gauge whether to maintain their investments or explore new opportunities. One critical area that deserves attention is Nvidia’s data center business, which is pivotal to the company’s revenue and profitability. This segment has been a focal point for Wall Street over the past three years and will likely continue to be so as AI demand surges.
CEO Jensen Huang has frequently provided updates on Nvidia’s product innovations, particularly its Hopper and Blackwell GPU architectures. While Blackwell is expected to drive growth, attention is also shifting toward the upcoming Rubin chips. Huang recently indicated that Nvidia has an impressive total order backlog of around $500 billion across Blackwell, Rubin, and related networking solutions. Of this total, approximately $300 billion in revenue is anticipated to be recognized in 2026.
The landscape is further energized by significant developments in the industry. For instance, Anthropic has entered into a substantial $30 billion agreement with Microsoft to leverage clusters of Blackwell and Rubin chips. From a broader perspective, investment giants like Goldman Sachs project that hyperscalers—including Microsoft, Alphabet, Amazon, and Meta Platforms—will earmark about $500 billion for AI capital expenditures next year. Moreover, research from McKinsey & Company forecasts that AI infrastructure could translate into a $7 trillion opportunity over the next five years.
With these robust macro trends at play, investors are encouraged to monitor how the increasing investment in AI infrastructure will affect Nvidia, as this surge in demand may extend beyond its core data center business. As Nvidia seeks to expand its footprint into adjacent markets, opportunities in areas such as next-generation CPUs and accelerated computing operating systems may become more apparent, bolstered by strategic partnerships with Intel and Palantir Technologies.
Valuation metrics for Nvidia are also attracting attention. Recent data reveals that the company’s price-to-sales (P/S) and forward price-to-earnings (P/E) ratios have revealed notable trends over the past year. Specifically, the valuation multiples saw significant compression during the first fiscal quarter of 2025, influenced by uncertainties regarding government tariff policies and the competitive threat posed by a Chinese start-up, DeepSeek. Currently, Nvidia’s valuation ratios are nearing their prior lows, further raising investor concerns about competition from AMD and application-specific integrated circuits (ASICs) from Broadcom.
Despite rising competition, many believe Nvidia is poised to maintain its market dominance. The AI infrastructure market is expected to be a multitrillion-dollar landscape over the coming years, making it unlikely that hyperscalers will migrate away from Nvidia’s GPUs anytime soon.
At present, Nvidia’s stock price is increasingly becoming attractive, despite ongoing challenges. With the company still operating at historic levels, signing new partnerships, and broadening its total addressable market, many investors view this as an opportune moment to buy into the dip. For those with a long-term investment horizon, the current price downturn presents an enticing opportunity to enhance their portfolio holdings in what remains a key player in the semiconductor sector as the AI revolution accelerates into the new year.
