tech
March 13, 2026
Barclays' model shows AI spending cycle is far from peak. That means Nvidia shares are too cheap
Consensus hyperscale capex is at least $225 billion "too low" in 2027 and 2028, according to a recent analysis from Barclays analysts.
TL;DR
- Barclays suggests investors are underestimating hyperscalers' AI spending, creating a buying opportunity for Nvidia.
- Nvidia's stock has traded sideways despite strong earnings, partly due to a rotation away from megacap tech stocks.
- Barclays estimates consensus hyperscale capex for 2027-2028 is at least $225 billion too low, expecting the capex up-cycle to extend.
- Nvidia is trading as if capex levels will peak in 2027, which Barclays views as too great a penalty given conservative EPS growth assumptions.
- Future spending could increase beyond current estimates due to next-generation hardware like Blackwell-architecture GPUs and newer chip families.
- The average selling price of chips is increasing, which is a positive for AI semiconductor stocks.
- While the semiconductor industry is varied, Nvidia's stock performance has lagged the iShares Semiconductor ETF this year.
- Micron has performed well due to its DRAM chip production, which is crucial for Nvidia's GPUs.
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