Tech Giants dump mountains of cash in data centers for artificial intelligence (AI). Microsoft Plans to spend $ 80 billion this year to expand its AI capacity. Amazon Stimulates its total capital expenditure, spread over his retail and cloud companies, up to $ 100 billion to accelerate its AI efforts. And Meta platforms Pour $ 65 billion into its data centers to feed his AI ambitions.
At first glance this all sounds great for Nvidia(Nasdaq: NVDA) stock. The company dominates the market for powerful AI accelerators and second place AMD has already drawn up a disappointing prediction for his own AI chips sales this year. Nvidia will create the lion’s share of editions that will scoop to AI accelerators.
Predictions for AI Accelerator Sales Painting a rosy image for Nvidia. Amd, for example, once predicted that AI accelerators would generate $ 500 billion in industry in 2028.
However, investors must ask an important follow -up question: how could those expenses possibly be justified?
If companies spend a half-trillion dollar a year on AI accelerators, not to mention many billions more about other data ineresters, those investments must bear fruit in the form of new sources of income or cost savings.
Is that realistic? What will that new income generate?
The appreciation of NVIDIA is based on optimism – namely the optimism that income and profit can continue to grow for years with blister percentages for years. The share is currently being traded for more than 40 times expected income for tax 2025.
This is a company that is already worth more than $ 3 trillion and generated $ 20 billion in adapted net income last quarter. The market for AI accelerators must continue to grow quickly for the Nvidia stock price to be useful.
It is not the case that investors make the possibility that the demand for AI accelerators flatlines – it is that investors that collapses the question. What happens to NVIDIA shares if, after Microsoft, Amazon and Meta, hundreds of billions of dollars in AI data centers, those companies fail to generate a reasonable return on the investment?
The AI Investment Boom feels like a huge case of FOMO (fear of missing). Technical giants are terrified of being left behind, so they throw caution to the wind.
There is now a huge amount of demand for AI computer capacity, but how many of them is experiments? In other words, how many of them are companies that try to see if it is financially useful? When some of those experiments do not come out, what will happen?
Then there is Deepseek, the Chinese company that has trained an AI model that can compete with the best AI models that American companies have to offer for a fraction of the price. If training Top-Tier AI models no longer requires megaclusters from AI accelerators, what will happen then?
I call it: Peak Nvidia is almost here, and it is close to the point where the stories and predictions that keep the AI tree floating start to fall apart. It is not that AI is not an impressive and useful technology. Just like the internet, it is revolutionary.
But just like the internet 25 years ago, it creates expectations that seem independent of reality. The internet changed the world but also ruined many investors along the way.
I can be completely wrong about this. It is certainly possible that the hundreds of billions of dollars spent on AI infrastructure will ultimately make financial and the demand for AI accelerators will continue to grow well in the future. Perhaps Nvidia will make a great prediction that drives the shares to new highlights. Everything is possible.
Yet I do not think that on 26 February I would like to become NVIDIA shareholder if the company reports its latest results. The expectations are towering and every hint of problems could fall the stock.
Consider this: Before you buy shares in Nvidia:
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and Sister of Meta Platforms CEO Mark Zuckerberg, is a member of the board of directors of the Motley Fool. John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of directors of the Motley Fool. Timothy Green has no position in one of the aforementioned shares. The Motley Fool has positions and recommends Advanced Micro Devices, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends the following options: Lang January 2026 $ 395 calls on Microsoft and short January 2026 $ 405 calls on Microsoft. The Motley Fool has a disclosure policy.
Prediction: NVIDIA shares will fall after February 26 was originally published by De Motley Fool
