How Nvidia's stock can get back to its winning ways after an underwhelming stretch

By Britney Nguyen

Nvidia's stock has trailed the chip sector this year, but Morgan Stanley thinks some investor concerns are overblown

Shares of Nvidia, which is led by CEO Jensen Huang, have been laggards so far this year.

Nvidia's stock has barely budged this year, while other chip stocks have soared. But Morgan Stanley analysts predict that shares of the world's largest company could soon get hot again.

Morgan Stanley analyst Joseph Moore said he's "been somewhat surprised" by Nvidia's (NVDA) laggard status so far this year, after a weak end to last year as well. During previous bouts of underperformance, Moore said concerns around Nvidia's business "were easier to dispute."

Investors are still bullish about Nvidia's chip rollout, Moore said, but the company needs to soothe three other concerns for its stock to move higher.

Nvidia's stock is up 1.4% so far this year, roughly in line with the S&P 500 SPX and far behind the PHLX Semiconductor Index SOX, which is up 12.7%. Nvidia shares were down about 2% on Thursday morning.

Read: Why Nvidia's stock isn't partying like other parts of the chip sector this year

Investors have been worried about the web of financing related to OpenAI's data-center buildout, Moore said. Shares of nonchip companies that are backing the AI startup, including Microsoft (MSFT), SoftBank Group (JP:9984) and Oracle (ORCL), have largely underperformed in the face of these concerns, he said. They have also been weighed down by fears that OpenAI's models are losing steam against rival offerings from Google and Anthropic.

Since some of those nonchip companies are Nvidia customers, investors questioning OpenAI's plans to spend $1.4 trillion on infrastructure are starting to wonder about Nvidia's prospects as well. If investors are unsure about Oracle's ability to convert its backlog into revenue, and about whether OpenAI can pay for all its commitments, that hits Nvidia's valuation, according to Moore.

But even if infrastructure spending looks too frothy, Moore said Nvidia is still in a good spot because it serves a broad ecosystem and would benefit from an environment where there are multiple winning AI models.

Moore also threw cold water on criticism of Nvidia's financial deals with ecosystem partners. Critics say that Nvidia's investments into its customers and partners are examples of circular financing, but Moore disagrees, as long as the company is paying current market prices. And while Nvidia could eventually make credit arrangements with partners, Moore doesn't see much risk from that.

See more: CoreWeave's stock soars. Why Nvidia's fresh bet on the company is so significant.

Another issue dogging the stock is whether Nvidia can maintain its huge technological advantage and defend its dominant market share. In November, Google released its Gemini 3 model, which it said was trained on its custom tensor processing units codeveloped with Broadcom (AVGO). That has raised questions about the relative advantages and disadvantages of graphics processing units made by Nvidia and rival Advanced Micro Devices (AMD) and of application-specific integrated circuits, or ASICs, that are designed by Broadcom together with its customers.

Still, Moore emphasized that Nvidia gained market share in 2025, and he expects it to maintain 85% of the revenue share in 2026.

Moore said it's hard to tell how well Nvidia will be able to fend off chip competitors as AI model developers look to diversify supply, but he thinks the company's upcoming Vera Rubin chip platform will offer a boost. Unlike its custom chip competitors, Nvidia can offer rack-scale connectivity and other products for high performance, Moore noted.

Nvidia's underwhelming recent stock performance also underscores how there are simply a bunch of more compelling investment opportunities in the chip sector these days than there were in the past. "There are many stocks to buy that benefit from the strong AI build, and many of them - especially on the commodity side - have more leverage," he said.

"Continued growth in AI is going to have MUCH broader coattails," he added, but said that he likes Nvidia and its growth prospects.

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-Britney Nguyen

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01-29-26 1215ET