Nvidia's Stellar Earnings Meet a Skeptical Market

Despite posting staggering quarterly results this week, Nvidia’s stock is heading for its worst week since last November. The chipmaker reported a 73% revenue surge to $68 billion and forecast even faster growth ahead, yet shares fell for a second consecutive day Friday, dropping 6% over five sessions. The disconnect highlights a market looking past current triumphs to a more contested future.

Wall Street’s focus has shifted to two looming challenges: the potential peak in big tech capital spending and the first serious signs of competitive pressure. Major Nvidia customers are now actively diversifying their AI chip suppliers. In a significant move, OpenAI announced a deal to use 2 gigawatts of computing capacity from Amazon’s custom Trainium chips, part of a massive new funding round. The AI leader also recently committed substantial capacity to chips from Cerebras.

Analysts view these moves as strategic hedges. "This is the biggest validation yet of Amazon’s custom silicon, giving OpenAI leverage against Nvidia’s supply and pricing," noted Patrick Moorhead of Moor Insights & Strategy. While OpenAI confirmed plans for 5 gigawatts on Nvidia’s next-generation chips, the pattern of diversification is clear. Meta is also exploring alternatives, with deals reported for AMD and Google chips.

The concern is that Nvidia’s explosive growth—analysts project a 65% jump this fiscal year—will decelerate to roughly 30% next year and into the mid-teens thereafter. This prospect has cooled the feverish rally, leaving the stock down 16% for the year. Some, like analysts at Jefferies, see this as a buying opportunity, arguing the valuation has become compelling. For now, however, investors appear to be recalibrating for a new phase where Nvidia’ dominance is no longer assumed.

Source: CNBC