Nvidia Reports Record Sales, But Stock Falls and Weighs on Tech Indices

Nvidia announced record results for the last quarter of the fiscal year, with revenue of $68.1 billion and a year-over-year sales jump of about 73%. The company also reported that data center segment revenue grew by 75%, confirming the scale of demand for artificial intelligence infrastructure. Despite this, the company's stock fell by about 5.5% on Thursday, and the declines spread more broadly to the semiconductor sector, weighing on the Nasdaq Composite and industry benchmarks. At the close, the Dow Jones remained almost unchanged, while the broad S&P 500 declined, and the VIX index rose, signaling greater nervousness. Some market commentary indicated that for AI-related companies, the bar of expectations is rising faster than the results themselves, and investors are discounting the risk of overvaluation. Changes in Selected Indices and Companies: Nvidia: -5.5, Nasdaq Composite: -1.2, S&P 500: -0.5, Dow Jones: 0.03, VIX: 4.24 68,1 mld USD — record quarterly revenue „Computing demand is growing exponentially.” — CEO of Nvidia, commented on the demand for computing power for AI.

In the 1990s and early 2000s, markets went through several phases of euphoria around new technologies, culminating in the bursting of the dot-com bubble in 2000. Since then, investors more frequently compare the growth dynamics of technology companies with their valuations and the real adoption of solutions. In innovation cycles, not only 'platform' companies have gained, but also infrastructure suppliers.

The thread of valuations and the sustainability of returns on AI investments also returned in European commentary: some investors rotated from expensive chip-related companies to firms perceived as potentially exposed to 'AI disruption' but undervalued. In Europe, the Stoxx 600 index remained near zero, and ASML shares fell as the market reacted to Nvidia's move. Simultaneously, some trading floors ended the session in positive territory: Milan rose by about 0.54%, and in the UK, the FTSE 100 closed at a record high. In Spain, the Ibex 35 also set a historical peak. In the background, commodity and currency factors appeared, including a strengthening dollar and oil price fluctuations in the context of US–Iran talks. „"The market is set up to prove its point, and Nvidia just didn't quite do it with those results."” — Chief Investment Officer at Facet, quoted in the context of the market's reaction to Nvidia's results.

An additional element of the picture were signals from Nvidia's earnings conference call about supply constraints for some chips, especially for the gaming segment, which is expected to weigh on results in the current quarter. CFO Colette Kress spoke of a "very tight" supply for several quarters, with a chance for improvement only towards the end of the year. This fueled questions about the availability of memory and components across the supply chain and whether Nvidia's market capitalization is outpacing the pace of earnings. Some analysts raised forecasts and price targets, but simultaneously, discussion grew about whether the market now expects not only good quarters but also a multi-year, stable growth trajectory.