Nvidia's Drought: History Suggests Two Outcomes

As of September 20, 2026, Nvidia's stock has not achieved a record closing price in 87 trading days, a situation reminiscent of previous periods. Since 2016, the AI chip giant has experienced at least seven similar droughts, with durations ranging from shorter periods resolving in new highs to longer ones leading to substantial market corrections. Historically, quick recoveries occurred within approximately 120 trading days, while longer stalls often signaled bear markets. Two prolonged droughts, starting in October 2018 and November 2021, saw the stock drop over 50% before eventually recovering.

The key differentiator for Nvidia appears to be its revenue performance. Previous prolonged downturns were preceded or accompanied by falling sales, notably due to cryptocurrency market crashes and weakened gaming chip demand. In contrast, Nvidia's revenue growth has accelerated consistently, with a 106% year-over-year increase reported in its second fiscal quarter ending July 26, 2026. Data center revenue alone climbed 117%, and net income surged 126%.

Management projects continued strong growth, with revenue expected to increase approximately 70% in fiscal year 2028, indicating a supply-constrained outlook. Analysts suggest that the current stock valuation, trading at roughly 27 times earnings and 14 times expected fiscal 2028 earnings, may not fully reflect this ongoing expansion. Given the accelerating sales and the supply limitations, the current situation appears more aligned with past periods of growth rather than the downturns marked by declining revenue.