Nvidia (NASDAQ: NVDA) extended its recent rebound on Tuesday, climbing 2.3% to $211.48 in early trading, as renewed enthusiasm for artificial intelligence infrastructure lifted the broader semiconductor sector and helped push U.S. equities to fresh record highs. The stock had already gained 2.9% in the previous session, marking a two-day recovery from recent pressure.
The rally was not isolated to Nvidia. Advanced Micro Devices (AMD) and Intel each surged roughly 9%, while the PHLX Semiconductor Index added 6% on top of a 61% year-to-date gain through Monday. The broader market also rallied, with the S&P 500 rising 1.8% to an intraday record, its first since June, and the Nasdaq Composite advancing 2.5%. The Dow Jones Industrial Average climbed 1,035 points, or 2%, led by a 6% jump in Caterpillar. Falling oil prices, partly on hopes that the Strait of Hormuz could reopen, and stronger-than-expected corporate earnings boosted investor sentiment.
Despite the recent uptick, Nvidia has underperformed its semiconductor peers this year. The stock is up 11% in 2026 and 16% over the past 12 months, while the PHLX Semiconductor Index has surged 61% year-to-date. This divergence reflects a broadening of AI infrastructure spending beyond graphics processing units (GPUs), with investors increasingly allocating capital across the chip supply chain, including custom accelerators and central processing units (CPUs).
Nvidia remains the dominant supplier of AI accelerators, but competition has intensified from AMD, custom chip developers, and Intel. This competitive pressure, combined with the stock's relative underperformance, has left Nvidia trading at a lower valuation multiple than many of its peers. According to FactSet, Nvidia's forward price-to-earnings (P/E) ratio stands at 18.9 times, below the S&P 500's forward multiple of about 20 times. The PHLX Semiconductor Index trades at an average forward multiple of 20.6 times, while Intel trades at approximately 50.4 times and AMD at about 43 times forward earnings.
Investors often use P/E multiples to gauge a company's valuation relative to expected earnings. With the proliferation of online trading apps, tracking such metrics has become more accessible, allowing retail and institutional investors to compare valuations across the sector. The comparatively lower multiple has led some market participants to view Nvidia as increasingly attractive following the recent selloff, even as competition and financing concerns persist.
Tuesday's gains build on Nvidia's recovery after several weeks of pressure driven by worries over AI spending sustainability, financing arrangements, and rising competition. Sentiment had also been dented by reports that a Chinese company began mass-producing key chipmaking equipment, raising questions about future competitive dynamics. Additionally, The Wall Street Journal reported that Nvidia is in discussions to provide a roughly $250 billion financing guarantee to support OpenAI's lease of a large data center project in Ohio. The arrangement would help OpenAI secure more favorable financing while underpinning long-term demand for Nvidia's AI processors. However, some investors have expressed concerns that such financing agreements could resemble the circular financing structures seen during the dotcom era, adding a layer of scrutiny to Nvidia's business model.
The latest rally suggests investors are once again focusing on the long-term outlook for AI infrastructure demand, even as competition broadens and questions remain over how future spending will be distributed across the semiconductor industry. For more on Nvidia's recent moves, see Nvidia's AI capex surge and credit market scrutiny of the OpenAI guarantee.
As the market digests these developments, Nvidia's valuation discount to peers could either narrow or widen depending on how AI spending evolves. The company's dominant position in AI accelerators remains a key driver, but investors are increasingly weighing the risks of competition and financing complexities. For now, the stock's rebound reflects a return of risk appetite in the tech sector, supported by strong earnings and easing geopolitical tensions.
This article is for informational purposes only and does not constitute financial advice.
