Nvidia’s AI Dominance Faces Relative Market Underperformance

Nvidia's stock, once the undisputed leader of the AI revolution, has seen its momentum wane in recent months. While shares surged nearly tenfold following ChatGPT's 2022 debut, the chipmaker's 28% gain since October 2024 lags behind peers. Taiwan Semiconductor, Micron, and Seagate have collectively more than doubled Nvidia's returns, with energy and infrastructure stocks supporting AI data centers posting 60%+ gains.

Political headwinds may be contributing to the divergence. The Trump administration's requirement for Nvidia and AMD to surrender 15% of Chinese AI chip sales to the U.S. government has created uncertainty. Yet the market reaction remains muted—shares actually climbed after White House confirmation of the China arrangement.

The disconnect highlights a paradox: Nvidia continues delivering strong earnings and faces insatiable GPU demand, yet investors appear cautious. This comes as secondary AI plays and infrastructure providers outperform the sector's standard-bearer, suggesting market participants are diversifying their exposure to the AI boom.