NEW YORK, July 5, 2026 – Nvidia (NASDAQ:NVDA) shares have risen only about 5% year-to-date in 2026, significantly underperforming the S&P 500's nearly 10% gain. This tepid price action comes despite the company reporting an 85% surge in revenue last quarter, highlighting a growing disconnect between operational performance and market valuation.
The chipmaker last traded at $194.83, down 1.5% from the prior close, giving it a market capitalization of approximately $4.75 trillion. While Nvidia continues to dominate the AI chip market, investors appear to be demanding more evidence that the rally can sustain its momentum.
Massive Supply Chain Commitments
A key risk lurking in the background is Nvidia's substantial manufacturing and supply obligations. According to the company's latest 10-Q filing, total manufacturing, supply, and capacity commitments stood at $119 billion as of April 26, with $95 billion of that amount due within the remainder of fiscal 2027. These commitments secure long-term production capacity but also introduce significant financial risk if demand were to soften.
Revenue concentration remains another concern. Three direct customers accounted for 30%, 18%, and 16% of accounts receivable, respectively, combining for 64% of the total. Meanwhile, revenue from customers headquartered outside the U.S. dropped to 22% of total revenue, down sharply from 42% a year ago, reflecting a shift toward domestic buyers.
Valuation in Focus
The valuation debate has intensified. Nvidia trades at roughly 21.7 times forward earnings, according to Motley Fool analyst Keithen Drury, who called it “an excellent stock to buy now.” Seeking Alpha’s JR Research pegged the forward multiple at just under 20. At the current price, annualized free cash flow from the first quarter implies a multiple of about 24.5 times run-rate free cash flow.
In a notable comparison, Motley Fool analyst Daniel Sparks pointed out that Nvidia trades at about 22 times forward earnings, while Coca-Cola (NYSE:KO) is at around 26 times. “A dominant company growing this fast rarely trades at a discount to a mature consumer staple,” Sparks wrote. Coca-Cola recently hit a record high, while Nvidia remains about 18% off its 52-week peak.
China Export Restrictions Bite
Export controls continue to limit Nvidia’s upside. The company projects zero data center compute sales in China for the second quarter, with no Hopper product shipments to the country. This compares with $4.6 billion in Hopper shipments to China during the first quarter of fiscal 2026. CFO Colette Kress noted the company has “strategically secured inventory and capacity to meet demand beyond the next several quarters.”
The company’s Q2 revenue guidance of $91 billion (plus or minus 2%) implies about 11.5% quarter-over-quarter growth, with no China data center revenue included in the outlook.
Market Context
24/7 Wall St. characterized the recent 12.46% monthly decline as a buying opportunity, citing the stock’s drop to $194.83. However, the firm flagged China as the key risk, with zero H20 shipments in the quarter and no data center compute revenue from China in the Q2 outlook.
Nvidia CEO Jensen Huang described the current environment as “the largest infrastructure expansion in human history,” as the buildout of AI factories accelerates. The company’s data center revenue surged 92% to $75.2 billion in the first quarter, while free cash flow reached $48.55 billion, representing about 59.5% of revenue.
U.S. markets were closed Friday for the Independence Day holiday and will resume normal cash trading on Monday.
