Company updates this year have put fresh numbers on the scale of the ongoing AI build-out, and they are staggering. Alphabet raised its 2026 capital spending forecast to a range of $195 billion to $205 billion, up from $180 billion to $190 billion. 

Brokers from Fonndure dive into this topic, noting that Amazon expects to invest roughly $200 billion this year, while Meta Platforms plans $125 billion to $145 billion.

Combined, just these three companies intend to spend more than half a trillion dollars in a single year, most of it directed toward AI infrastructure. That tally doesn’t even include Microsoft, which has pointed to roughly $190 billion of its own spending.

Nvidia Sits at the Center, But the Stock Slipped Anyway

No company captures more of that spending than Nvidia, the dominant supplier of the graphics processing units (GPUs) these data centers are built around. Despite that positioning, Nvidia shares fell alongside other big tech names recently and now sit roughly 12% below their 52-week high.

That disconnect, customers committing record sums while the chip supplier’s stock drifts lower, is worth examining closely, since one side of that equation is likely mispricing reality.

Where the AI Budgets Actually Go

A large share of this investment is flowing into hardware, an area where Nvidia holds a dominant position. 

In the second quarter, Alphabet devoted roughly 60% of its technical infrastructure spend to servers, with the rest going to data centers and networking equipment. The company further underscored its AI ambitions by raising $49.6 billion through a June stock offering, specifically to fund the expansion of its AI infrastructure. 

This surge in investment is clearly reflected in Nvidia’s financial performance. In its fiscal first quarter of 2027, the company reported revenue growth of 85% year over year, reaching a record $81.6 billion. Even more notably, its data centre segment surged 92% to $75.2 billion, underscoring the massive demand for AI-driven computing power.

Together, these figures highlight how hyperscale AI spending is directly fuelling Nvidia’s growth, positioning it as a primary beneficiary of the ongoing global investment in advanced computing infrastructure.

Guidance Points to Continued Acceleration

Nvidia guided for approximately $91 billion in revenue for its upcoming fiscal second quarter, all while maintaining a gross margin near 75%. Company leadership has described the current AI infrastructure expansion as one of the largest buildouts in history, framing it as still accelerating rather than slowing.

In other words, the spending disclosed by customers and the revenue showing up on Nvidia’s income statement are telling the same story, one of sustained, accelerating demand rather than a temporary spike.

Why the Stock Fell Despite Strong Fundamentals

One likely explanation for Thursday’s decline is that the market broadly punished heavy spenders following Alphabet’s capital expenditure raise, with the sell-off spreading across megacap tech, Nvidia included. 

When investors start questioning whether half a trillion dollars in AI spending will ultimately pay off, they also begin discounting the future revenue that spending is expected to generate, and a meaningful share of that revenue lands directly on Nvidia’s books.

That’s the real risk worth watching. Nvidia’s growth remains a direct function of a handful of customers’ willingness to keep expanding their budgets, and capital plans that accelerate for several years can just as easily flatten out.

Customers Are Also Building Their Own Chips

Some of Nvidia’s biggest customers are simultaneously working to reduce their reliance on its hardware. Meta disclosed on its first-quarter earnings call that it’s rolling out more than a gigawatt of custom silicon developed with a major chip partner, alongside processors from another competing chipmaker, complementing, for now, the Nvidia systems it continues installing.

That diversification trend is worth monitoring, even if it hasn’t yet meaningfully dented Nvidia’s growth trajectory.

Why the Valuation Still Looks Reasonable

Despite the recent pullback, Nvidia’s valuation is less demanding than it may initially appear. The stock currently trades at around 32 times trailing earnings, a level often associated with slower-growing consumer businesses, yet Nvidia has delivered 85% year-over-year revenue growth. 

On a forward basis, using expected earnings over the next 12 months, the multiple falls further to approximately 21 times, suggesting a more moderate valuation relative to its growth profile.

This implies that the market is already factoring in a significant slowdown in growth, rather than assuming current momentum will continue indefinitely. As a result, the recent share price weakness may not necessarily signal deteriorating fundamentals, but rather a recalibration of expectations.

For long-term investors, this dynamic could present an attractive entry point, provided they are comfortable with risks such as customer concentration and potential volatility. Nvidia’s outlook remains closely tied to sustained demand for AI infrastructure and continued large-scale investment from major technology companies.