Nvidia Shares Drop 13% Amid AI Infrastructure Skepticism
Nvidia shares declined 13% as investors question AI returns, though major cloud providers continue to increase capital expenditures for data center infrastructure.
Shares of Nvidia Inc. have declined 13% over the past month as investors express skepticism regarding the long-term return on investment for AI data center infrastructure. Despite this volatility, the company is projected to report nearly $109 billion in sales when it releases its fiscal 2027 third-quarter results on November 17.
Market indicators suggest that underlying demand for AI hardware remains strong. SK Hynix, a primary memory supplier for Nvidia, reports that 50% of its memory supply for 2027-2028 is already sold out. This demand is supported by increased capital expenditures from major customers; Alphabet Inc. plans to spend up to $205 billion this year, while Microsoft projects $170 billion for fiscal 2027.
Financial analysts maintain a positive long-term outlook, with an average price target of $327, representing a potential 62% upside from the current price of $202. Bank of America estimates that total spending on AI data centers will exceed $2.1 trillion by 2028.
