Nvidia Stock Is Struggling in 2026, and This Magnificent Seven Stock Can Make Things Worse for the Artificial Intelligence (AI) Giant. Should Investors Hit the Sell Button?

3 weeks ago 12

Harsh Chauhan, The Motley Fool

Mon, July 20, 2026 astatine 7:50 AM CDT 5 min read

This has been a forgettable twelvemonth for Nvidia (NASDAQ: NVDA) investors, arsenic the spot giant's 7% gains airy successful examination to the 58% appreciation successful the PHLX Semiconductor Sector scale truthful acold this year.

Nvidia's underperformance this twelvemonth has much to bash with capitalist cognition than with its fiscal performance. The institution is connected way to timepiece stronger maturation successful the existent fiscal year, and it has a sizable gross pipeline that should let it to prolong coagulated maturation successful the aboriginal arsenic well. However, investors person been looking astatine different semiconductor stocks alternatively than Nvidia to capitalize connected the AI spot boom, arsenic evidenced by the stock's mediocre returns successful 2026.

Missed Nvidia successful 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" awesome flashed for a little-known chipmaker called Nvidia. For the archetypal clip successful years, that aforesaid "Total Conviction" awesome is flashing for a institution 1/100th the size of Nvidia. Continue »

It is casual to spot wherefore that's the case, particularly pursuing a study that suggests Meta Platforms (NASDAQ: META), 1 of Nvidia's cardinal customers, is going large connected its in-house spot improvement efforts.

Image source: The Motley Fool.

Meta Platforms is looking to trim its dependence connected Nvidia

Reuters reports that Meta Platforms volition statesman manufacturing an in-house AI spot starting successful September. The Magnificent Seven institution aims to summation its wide AI compute powerfulness to 14 gigawatts (GW) successful 2027, relying connected an in-house customized AI spot to bolster the AI features powering Instagram and Facebook.

What's worthy noting is that the investigating of this spot was done successful conscionable six weeks, and nary large issues were recovered during this stage. Meta is collaborating with Broadcom to co-design the chip, portion foundry elephantine Taiwan Semiconductor Manufacturing is its manufacturing partner. Moreover, Reuters notes that Meta is readying 4 generations of in-house processors to enactment its AI information halfway infrastructure.

Doing truthful volition let Meta to plan and deploy chips tailor-made to its requirements, thereby reducing computing costs. More importantly, Meta volition beryllium capable to trim its dependence connected the costly graphics processing units (GPUs) that it purchases from Nvidia. Meta CEO Mark Zuckerberg noted past twelvemonth that the societal media elephantine was connected way to deploy 1.3 cardinal GPUs by the extremity of 2025. A important chunk of them would person been from Nvidia, considering that it controlled an estimated 80% to 90% of the AI spot marketplace until past year.

So, Meta's determination to accelerate the deployment of its in-house processors doesn't bode good for Nvidia stock, arsenic it whitethorn conflict to look from the rut it has been successful truthful acold successful 2026. Does this mean it is clip to commencement booking profits successful Nvidia and look astatine alternatives to capitalize connected the AI spot market's growth? Not necessarily.

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