Nvidia stock keeps sliding as hyperscalers build their own chips instead of buying more GPUs

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The world's most valuable chipmaker is having an oddly rough 2026

Nvidia shares fell again this week, dropping back toward the $200 level after briefly recovering from an earlier pullback, as investors grow increasingly nervous that stretched valuations, rising competition, and a possibly slowing AI investment cycle could undermine the company's extraordinary multi year rally. Despite still being up for the year, Nvidia has significantly lagged the broader chip sector, through last Friday's close the Philadelphia Semiconductor Index had gained 75 percent while Nvidia shares were up just 12 percent

The real driver, custom silicon creeping into Nvidia's territory

The latest AI infrastructure announcement fueling the jitters actually came from a customer, not a rival, Meta said it would increase spending on its Louisiana data center to more than 50 billion dollars. Meta remains one of Nvidia's biggest buyers and uses its hardware to train frontier models, so on its face that is bullish. But reports that key hyperscale customers are accelerating their own transition toward custom application specific chips, reducing reliance on Nvidia's third party hardware, are weighing on sentiment, since it represents a long term threat to Nvidia's dominant position in the data center market rather than an immediate one

The numbers underneath the noise

Nvidia's forward price to earnings ratio has fallen to around 19 to 21, depending on the day, the lowest multiple since 2015, even as the company continues genuinely rapid growth, revenue rose at an 85 percent clip last quarter with Wall Street analysts expecting 96 percent growth for the current one. Wedbush analyst Dan Ives argues there is a real disconnect between the stock's underperformance and the company's actual position, pointing out that Nvidia remains, in his words, the one chip in the world fueling the AI revolution, and estimating that chip demand continues to outstrip supply by roughly 15 to 1

Why this matters beyond one stock price

Whether hyperscalers like Google, Meta, and Amazon successfully wean themselves off Nvidia GPUs in favor of their own custom chips is one of the more consequential open questions in the entire AI industry right now, since Nvidia's roughly 97 percent share of the GPU market has been one of the more remarkable moats in modern tech history. The stock's underperformance this year is essentially the market pricing in genuine uncertainty about whether that moat holds, rather than any sign that AI infrastructure spending itself is actually slowing down

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