Nvidia nears $6 trillion but lags chip sector's 2026 rally

Nvidia's fresh record bolsters the AI narrative at a moment when many chip stocks are already well ahead, prompting debate about whether the leader is merely playing catch-up or the sector is overextended. The buyback programme creates a consistent demand stream for the shares, potentially softening any declines. As the biggest constituent in key US indexes, Nvidia's performance heavily affects the S&P 500 and Nasdaq; its current strength is propping up equity benchmarks even as bond yields stay high. If the AI infrastructure bottleneck shifts toward energy and real estate, that could push utilities and data centre operators into the spotlight.

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Nvidia is approaching $6 trillion in market cap, but the most unusual aspect of its rally is that the entire year has been spent trying to catch up with other chip stocks.

Key points:

• The stock reached new all-time highs near $238-$240 on Monday, following its first record close since May on Friday.
• Nvidia's market capitalisation stands at roughly $5.7 trillion, around $300 billion short of the $6 trillion threshold, and the shares have gained about 28% year-to-date.
• The company's board authorised an additional $150 billion in share repurchases, bringing the total remaining authorisation to approximately $235 billion through fiscal 2028.
• Morgan Stanley once again named Nvidia its top semiconductor pick, pointing to AI demand and a bottleneck shift toward data centre electricity.
• The chipmaker forecasts current-quarter revenue of roughly $108 billion.
• A broad semiconductor exchange-traded fund has climbed roughly 96% this year, more than tripling Nvidia's advance.

Nvidia stock reached new record levels on Monday, continuing a surge that has boosted the AI chip company's valuation to about $5.7 trillion, some $300 billion shy of the $6 trillion milestone.

Shares changed hands near $238-$240, extending Friday's rise of nearly 3% that produced the first record close since May. Year-to-date, Nvidia has advanced roughly 28% and mounted a sharp recovery from a July downturn that erased about $1 trillion from its market cap.

Two catalysts powered the latest upward move. Nvidia's board green-lit another $150 billion in buybacks, raising the total remaining authorisation to roughly $235 billion through fiscal 2028—reportedly the biggest repurchase plan on record. Separately, Morgan Stanley renewed its top pick rating on Nvidia following meetings with CEO Jensen Huang, highlighting persistent AI demand, a widening client base and a valuation the bank deems relatively cheap. The bank contended that the primary bottleneck for AI infrastructure is moving from chip availability to power and data centre real estate, which should benefit Nvidia as customers try to squeeze more computation out of limited electricity supplies.

The underlying financials are robust. Nvidia's most recently reported quarterly revenue approximately doubled year over year, and management has forecast roughly $108 billion in revenue for the current quarter. Supply chain indicators are also positive: Taiwan's Foxconn posted record September revenue driven by AI server orders.

But the record obscures a subtler truth: Nvidia has underperformed its own sector in 2026. A broad semiconductor ETF is up roughly 96% this year, more than tripling Nvidia's gain. By that yardstick, the industry leader has been playing catch-up rather than setting the pace.

Opinion among analysts is split on the outlook. Some contend that Nvidia's earnings momentum can drive further share gains even as its valuation multiple shrinks. Others caution that the AI investment cycle has not yet entered the phase where overinvestment and excess capacity threaten chip makers, but that such risks could emerge eventually.