Can Nvidia regain its momentum in the second half of 2026?

Nvidia enters the second half of 2026 facing growing pressure to defend both its market leadership and investor confidence.

While the company remains the world's largest by market capitalisation, its stock has lagged several semiconductor peers this year as investors broaden their focus across the artificial intelligence (AI) supply chain.

The company continues to benefit from strong demand for AI processors.

However, questions are emerging over whether Nvidia can sustain its dominance as its largest customers increasingly develop competing technologies and as Apple closes the gap in market value.

Apple closes the gap in market value

Nvidia has remained the world's most valuable listed company by market capitalisation for 258 consecutive days after reclaiming the top position from Microsoft in late June last year.

Although the streak is among the longest this century, it remains well behind Apple's longest run as the market leader.

Apple held the top position for 1,344 consecutive days between 2013 and 2018.

Furthermore, Apple is closing the gap with a $4.53 trillion valuation after a 13% gain in 2026.

Nvidia currently has a market capitalization of $4.72 trillion, after a paltry 3% gain in the year so far.

Nvidia continues to strengthen its core business

Nvidia has maintained a consistent pace of technological innovation through annual upgrades to its AI processors.

The company expects to ship its latest Vera Rubin hardware in volume during the second half of the year.

It is also expanding beyond data centre chips with a recently announced processor aimed at the consumer PC market.

Over the longer term, Nvidia is looking towards emerging opportunities such as robotics, although faster commercial adoption could help address investor concerns about the longevity of the AI investment cycle.

On the manufacturing front, Nvidia has largely avoided significant production disruptions.

The company continues investing in key suppliers while securing long-term agreements for critical components, including memory chips.

Chief Executive Officer Jensen Huang has also balanced political demands for greater investment in the United States while securing manufacturing capacity from Taiwan Semiconductor Manufacturing.

Shareholder returns mirror Apple's strategy

Nvidia has increasingly adopted a shareholder return strategy similar to Apple's.

Apple returns nearly all of its free cash flow through share buybacks.

Nvidia plans to return around 50% of its free cash flow through dividends and buybacks this year, with management indicating that this proportion could increase over time.

The approach reflects growing confidence in the company's cash-generating ability while rewarding long-term shareholders.

Software ecosystem remains a competitive advantage

Beyond hardware, Nvidia continues to benefit from its CUDA software platform, which has helped establish a strong competitive position in AI model training.

The next challenge will be proving that CUDA remains equally effective in AI inference, the process of running trained AI models.

Competition is increasing in this area.

Cerebras Systems claims its integrated hardware and software platform delivers faster inference performance than Nvidia.

At the same time, Alphabet and Amazon are developing custom AI chips for external customers while continuing to purchase Nvidia processors for their own AI infrastructure.

The trend highlights an increasingly complex competitive landscape in which some of Nvidia's biggest customers are simultaneously becoming rivals.

Consumer expansion could become the next growth driver

For Nvidia to replicate Apple's long-term durability, the company may need to extend its ecosystem beyond enterprise AI infrastructure.

Its expansion into consumer PCs and, eventually, robotics could help build a more integrated hardware and software ecosystem that encourages customer loyalty, similar to Apple's tightly connected product portfolio.

Successfully creating such an ecosystem could reduce customer switching while opening additional revenue streams beyond data centres.

Shares face near-term pressure

Nvidia shares extended recent weakness on Thursday.

The stock briefly traded above the $200 level after opening higher before reversing direction.

Despite remaining one of the primary beneficiaries of AI-related investment, Nvidia has underperformed several semiconductor companies in 2026.

The semiconductor sector has delivered strong gains during the first half of the year.

The VanEck Semiconductor ETF advanced more than 70% during the first six months of 2026, marking its strongest first-half performance since the fund launched in 2000.

Following the rally, several leading semiconductor stocks experienced profit-taking.

Investor interest has also shifted across different segments of the AI supply chain.

Memory chip manufacturers have benefited from supply constraints and rising demand, while companies specialising in central processing units (CPUs) have attracted increased attention amid expectations that next-generation agentic AI systems will require significantly greater computing resources.

Micron has emerged as one of the biggest beneficiaries of the memory cycle.

Advanced Micro Devices and Intel have also gained as investors anticipate stronger CPU demand alongside continued AI infrastructure expansion.

This broader investor interest has created a more competitive investment landscape for Nvidia despite sustained demand for its graphics processors.

Despite its modest 3% gain in 2026, some investors believe Nvidia could deliver a significantly stronger performance during the second half of the year if AI spending continues to accelerate into 2027.

NVDA currently trades at approximately 21.5 times forward earnings, broadly in line with the S&P 500.

In the previous two years, however, the company's valuation reached more than 40 times forward earnings by year-end.

Supporters of the stock argue that continued AI infrastructure investment could justify a higher valuation once investors begin pricing in expected spending beyond 2026.

Whether Nvidia can regain stronger momentum will likely depend on its ability to maintain technological leadership, defend its software ecosystem, expand into new consumer markets, and demonstrate that long-term AI demand remains intact amid intensifying competition across the semiconductor industry.