This is why Nvidia’s results failed to woo investors
Nvidia’s earnings juggernaut continued this week with another quarter of rapid growth, record revenues and guidance ahead of expectations. Yet the reaction from Wall Street was muted, reflecting the scale of expectations now set for the world’s most valuable listed company.
The chip giant reported fourth-quarter revenue of $68.1bn (£50.3bn), up 73 per cent year on year and above analyst forecasts of roughly $66bn. For the full fiscal year, revenue rose 65 per cent to a record $215.9bn.
The company also forecast first-quarter revenue of around $78bn, plus or minus two per cent, comfortably ahead of market estimates of roughly $73bn.
But despite those figures, shares traded broadly flat in after-hours dealings, giving up early gains.
For a company that has now beaten Wall Street forecasts for 14 consecutive quarters, simply delivering another strong quarter may not be enough to shift sentiment materially.
Data centre revenue, the core of Nvidia’s AI business, reached $62.3bn in the quarter, ahead of expectations.
Chief financial officer Colette Kress said hyperscalers accounted for “slightly over 50 per cent” of data centre revenue, while growth was increasingly diversified across other customers.
Chief executive Jensen Huang confidently told markets that “computing demand is growing exponentially”, and that customers are still “racing to invest in AI compute – the factories powering the AI industrial revolution and their future growth.”
He added: “The agentic AI inflection point has arrived. This new way of doing computing is not going to go back.”
Huang pointed to Nvidia’s infamous ‘Grace Blackwell’systems and its newly unveiled Vera Rubin platform, unveiled at CES in January, as technologies that would “extend our leadership further.”
Expectations and competition
Analysts broadly recognised the strength of Nvidia’s earnings, but said the stock’s valuation already reflects much of that strength.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the tech behemoth had delivered “a monster quarter, and if 73 per cent revenue growth wasn’t enough, guidance points to yet another acceleration in the coming quarter to 77 per cent at the midpoint.”=
However, he added: “Questions will still linger over whether the current AI spending wave can sustain growth beyond the next few years, and whether Nvidia will remain as dominant as AI shifts from training models to running everyday tasks”.
Jacob Bourne, analyst at Emarketer, said demand from hyperscalers remains robust, with billions more in capital expenditure planned this year.
“Nvidia once again exceeded expectations, and with billions more in capex planned by the hyperscalers this year, demand for Nvidia’s chips remains robust,” he said.
But he added that “the competitive picture is also shifting as companies like Meta diversify toward AMD and the big cloud players invest more in custom silicon.”
“This puts a focus on Nvidia’s guidance for what the future holds in terms of maintaining its dominance as the AI buildout matures and questions around enterprise ROI intensify.”
Beyond valuation and competition, geopolitical uncertainty continues to hang over the stock.
Nvidia’s outlook for the current quarter does not include expected revenue from China.
Although US authorities have begun allowing limited shipments of its H200 chips under licence, a US Commerce Department official said this week that none have yet been sold to Chinese customers.
The chipmaker also disclosed that two customers accounted for 36 per cent of total revenue in fiscal 2026, up from 34 per cent shared among three customers the previous year, pointing to a high degree of sales concentration among a handful of buyers.
None of this detracts from Nvidia’s performance. Revenue growth remains exceptional for a company of its size, margins are strong, and $41.1bn was returned to shareholders over the past year through buybacks and dividends.
However, for the AI bellwether that now sits at the centre of global capital markets, with expectations already elevated alongside its $4.8tn valuation, investors appear to be waiting not just for growth, but for confidence in the continuation of the AI boom.