Nvidia stock may be strong, but Taiwan just exposed its biggest risk

Nvidia stock's NASDAQ:NVDA latest movement has little evidence that the AI infrastructure boom is losing momentum.

NVDA jumped 4% on Friday to close at $210.96, extending their weekly gain to about 8.3% as investors returned to the AI-chip leader following a period of relative underperformance.

The advance left the stock roughly 13% higher in 2026, based on its adjusted year-end close of $186.27.

Yet a warning from Taiwan has drawn attention to the financial conditions supporting that growth.

Central bank governor Yang Chin-long told lawmakers on July 9 that AI was driving genuine economic expansion, but excessive borrowing could encourage speculative investment and overbuilding.

Taiwan matters because TSMC sits at the centre of the supply chain, serving Nvidia and other global technology companies.

Taiwan’s warning targets the fuel behind Nvidia’s boom

Yang did not declare that AI demand was about to collapse, nor did he single out Nvidia’s valuation.

His concern was that technology companies could borrow too aggressively and expand before the financial returns from their investments were fully established.

“AI is driven by real growth potential,” Yang said at the parliamentary hearing, while warning about over-expansion caused by excessive leverage.

That distinction goes directly to Nvidia’s business model. The company supplies the processors, networking equipment and complete systems used to build AI data centres.

Large cloud operators must spend heavily on chips, buildings, electricity and cooling before those assets produce meaningful revenue.

For Nvidia, greater hyperscaler spending supports near-term sales.

But if that expenditure creates weaker cash flow, rising debt or disappointing returns, customers could eventually delay data-centre projects, keep existing hardware running for longer or increase their use of cheaper custom processors.

Taiwan has therefore highlighted a financial-cycle risk rather than a product weakness.

Nvidia could remain the dominant AI-chip supplier and still suffer if the overall infrastructure budget grows more slowly.

Wall Street still sees Nvidia’s moat intact

Bank of America remains firmly bullish. Analyst Vivek Arya reiterated a Buy rating and $350 price target, arguing that investors are undervaluing Nvidia’s pricing power.

Nvidia can “sustain” roughly 65% to 70% of AI capital spending over the long term, Arya said in a research note.

He expects the Rubin platform to command higher prices than Blackwell, helping Nvidia maintain gross margins in the mid-70% range despite rising memory costs.

Goldman Sachs analyst James Schneider has also maintained a Buy rating, with a $285 target.

Schneider noted that Nvidia traded at less than 14 times his forecast for 2027 earnings, a valuation he considers compelling given the company’s growth.

Even after allowing for market-share gains by custom AI chips and rival processors, Goldman expects Nvidia’s revenue to climb about 55% to $635 billion next year.

The message from both banks is that competition is real, but Nvidia’s valuation already reflects a considerable amount of anxiety about it.