Nvidia shares fell in early Thursday trading, extending a modest decline after a largely flat performance over the past month, despite major commitments to artificial intelligence infrastructure.
Shares dropped 2.1% to $173 in early trade, following a 0.8% fall on Wednesday, as investors weighed both near-term headwinds and long-term growth potential.
The pullback comes after technology companies signalled significant AI-related spending, highlighting Nvidia’s central role in the industry.
Analysts at Yardeni Research described the narrative around the chipmaker as “messy,” noting that while Nvidia has ample cash to fund these initiatives, its financial performance is increasingly linked to the smaller firms it supports.
“As long as companies […] can continue to raise billions of dollars from Nvidia and others to build data centres, Nvidia’s chips should stay in demand,” Yardeni analysts wrote.
“But the day that stops, watch out.”
Nvidia’s massive AI investments
This week, Nvidia announced plans to invest up to $100 billion in OpenAI to help the AI lab build data centres capable of supporting advanced workloads on Nvidia’s AI-optimised chips.
The investment is part of a broader strategy, which also includes a $5 billion stake in Intel with joint processor development, approximately $2.7 billion in the UK’s AI start-up ecosystem, and a $500 million investment in British data centre operator Nscale.
These moves aim to ensure Nvidia remains central to AI infrastructure, supporting both compute and networking capabilities that are crucial for AI deployment.
By financing and partnering with smaller companies, Nvidia seeks to maintain its technology at the heart of an expanding global AI ecosystem.
The AI loop concerns
Nvidia’s recent multibillion-dollar investment in OpenAI will funnel substantial capital to the AI startup, though much of it is expected to cover the use of Nvidia’s advanced chips.
The agreement, valued at up to $100 billion, will be disbursed as AI supercomputing facilities come online over the coming years, with the first expected in the second half of 2026.
Key details—including the timing of the buildouts and the cost of each data centre—remain unclear.
Media Reports suggest that OpenAI plans to pay for Nvidia’s graphics processing units through lease arrangements rather than upfront purchases.
While the deal underscores the scale of AI investment, it has raised investor concerns over the sustainability of the sector.
Some market participants worry about the “circular nature” of such arrangements, boosting earnings on paper without creating tangible new output.
Wall Street analyst remains bullish
Barclays analyst Tom O’Malley said Nvidia could be the primary beneficiary of more than $2 trillion in projected AI infrastructure spending over the next five years.
Of that, he expects $1.5 trillion to go toward compute and networking technologies, where Nvidia leads the market, involving the purchase of nearly 19 million GPUs.
“We see this [AI spending] largely flowing into the Nvidia P&L over the next 5+ years, moving numbers materially higher and making this the most attractive name in our space,” O’Malley said.
He raised his price target to $240 from $200, indicating 37% potential upside, while keeping an Overweight rating.
The revised target reflects a 35-times earnings multiple, up from 29, factoring in potential gains from AI momentum and data centre expansions.
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