What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) fell 4.3% in the morning session after it reversed initial post-earnings gains as investors digested its stellar fourth-quarter report.
Nvidia reported another quarter of significant growth, with revenue climbing 73.2% year-on-year to $68.13 billion, beating analyst expectations. The company also provided an optimistic revenue forecast for the current quarter of $78 billion, which surpassed Wall Street's estimates. However, with extremely high expectations already priced into the stock, the impressive results may have triggered a "sell-the-news" reaction from investors looking to take profits. The drop also reflects underlying concerns about whether the massive, AI-driven spending from customers can be sustained at its current pace in the long run.
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What Is The Market Telling Us
Nvidia’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 20 days ago when the stock gained 7.8% on the news that CEO Jensen Huang declared that the $660 billion tech industry investment in AI infrastructure is sustainable and justified. Addressing concerns over aggressive spending by "hyperscalers" like Meta and Microsoft, Huang argued that these massive capital expenditures are supported by rising cash flows and "sky-high" demand. He framed the current expansion as the largest infrastructure buildout in history, where massive investments in computing power are essential to fuel the next generation of digital services and corporate profitability. The rally was further supported by evidence of high hardware utilization and clear monetization pathways. Huang noted that even older chips remain fully rented out, while AI labs like OpenAI see revenue grow exponentially compared to their compute capacity.
Nvidia is down 1% since the beginning of the year, and at $186.93 per share, it is trading 9.7% below its 52-week high of $207.04 from October 2025. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $13,630.
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