Key Points
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Nvidia has erased $1.7 trillion in market value since early October.
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Macro concerns around Nvidia’s growth have to do with the pace of artificial intelligence (AI) infrastructure spending and regulatory uncertainty following the midterms.
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Recent news that Nvidia CEO Jensen Huang had ties to an alleged Chinese spy are also weighing on the stock.
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For much of 2026, Nvidia (NASDAQ:NVDA) looked unstoppable. The artificial intelligence (AI) chipmaker delivered strong financial results, while Wall Street rewarded its dominance with a lofty valuation. In early October, Nvidia’s market capitalization peaked around $5.8 trillion, making it the world’s most valuable company.
Unfortunately, the momentum didn’t last. As of this writing (Nov. 10), Nvidia’s market cap has fallen to $4.1 trillion. That’s a decline of 29%, representing roughly $1.7 trillion in lost value.
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NVDA Market Cap data by YCharts
The sell-off reflects growing uncertainty surrounding AI infrastructure spending, political developments, and a new investigation involving CEO Jensen Huang. Nevertheless, I think investors are overlooking something important.
Nvidia’s stock price has changed dramatically, but its underlying competitive advantages haven’t disappeared. Here’s why I think the semiconductor behemoth could stage a comeback in 2027.
What makes Nvidia so valuable?
Nvidia’s meteoric rise isn’t simply the result of investors being excited about AI. It was actually supported by unprecedented growth in revenue and profit. During the company’s fiscal second quarter, Nvidia generated $96.2 billion in revenue, representing a 106% increase year over year. The data center business contributed $89 billion, growing 117% annually, while earnings per share (EPS) surged 128% to $2.46.
Nvidia’s growth is an extension of the capital expenditure (capex) commitments from hyperscalers including Microsoft, Amazon, Alphabet, Meta Platforms, and Oracle.
As big tech expands its computing infrastructure to train and operate AI models, companies are purchasing Nvidia’s GPUs, networking equipment, and integrated computing systems. The company’s Blackwell architecture has been instrumental in meeting this demand, while the newer Vera Rubin platform is entering full-scale production.
Nvidia is also expanding into specialized inference accelerators and agentic AI. In other words, Nvidia isn’t simply selling individual chips. It’s building a comprehensive stack of hardware and software for the next generation of AI. This explains why investors were willing to assign the company such a premium valuation.
Why is Nvidia stock plummeting?
Nvidia’s valuation increasingly depends on the assumption that AI infrastructure spending will continue expanding at an unprecedented pace. However, investors are beginning to question how quickly the hyperscalers can generate enough returns on their data center investments.
The midterm elections introduced another layer of uncertainty. With Democrats gaining control of Congress, investors are reassessing the possibility of additional scrutiny surrounding data center construction, energy consumption, and electricity prices. While this doesn’t mean AI spending will suddenly collapse, tighter regulations or slower project approvals could affect the timing of infrastructure investments.
More recently, Nvidia has encountered an entirely different challenge. Reports concerning CEO Jensen Huang’s relationship with a business executive suspected of ties to Chinese intelligence prompted Nvidia’s board of directors to launch an investigation.
While the board says it has no reason to believe company secrets or national security information were compromised, the situation introduces governance and potential succession risks. If Huang is eventually replaced or steps down as CEO, investors would understandably question how the transition might affect Nvidia’s strategy, customer relationships, and execution. For now, the uncertainty itself is contributing to outsize pressure on Nvidia shares.
Nvidia stock could rebound in 2027
Despite these challenges, I think Nvidia remains exceptionally well positioned for long-term growth. Consider the company’s competitive position. Advanced Micro Devices is expanding its AI accelerator business, while Broadcom is helping companies develop custom chips.
However, neither competitor has replicated Nvidia’s ecosystem of GPUs, networking technology, and the CUDA software system. This ecosystem matters because it makes switching suppliers considerably time-consuming and expensive, creating meaningful barriers to competition.
Even if data center construction slows, that doesn’t necessarily mean Nvidia’s existing customers will stop purchasing the company’s products. Cloud providers and frontier labs will still need to continue upgrading infrastructure, replacing older systems, and supporting growing demand for AI inference.
Even if Nvidia eventually operates under a different CEO, the company’s technology, intellectual property (IP), customer relationships, and engineering talent aren’t going to vanish overnight. Likewise, slower growth in AI infrastructure spending doesn’t automatically eliminate Nvidia’s profitability.
Nvidia could look different a year from now. Its leadership might change, its customers could become more selective, and its growth rate might moderate. Nevertheless, I expect Nvidia to remain one of the most important and profitable companies in the AI industry.
In the short term, stock prices are often driven by sentiment, uncertainty, and headlines. Over the long term, earnings growth and valuation tend to matter far more. That’s why I think Nvidia’s recent sell-off could look like a compelling buying opportunity, and why I’m predicting a meaningful recovery in 2027.
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Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Broadcom, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool has a disclosure policy.
