Nvidia Corporation (NVDA) ended Thursday's trading session down 1.77% at $219.51, a decline that came despite the chipmaker reporting record quarterly revenue and issuing guidance above analyst expectations. The broader market, meanwhile, posted gains, with the S&P 500 rising 0.17% and the Nasdaq Composite edging up 0.09%, underscoring that Nvidia's drop was stock-specific rather than a sector-wide move.
Record Results and Market Reaction
For its fiscal first quarter, Nvidia reported revenue of $81.6 billion, an 85% increase from the same period last year. Data-center revenue, a key driver of the company's growth, surged 92% to $75.2 billion, also a record. Looking ahead, Nvidia guided for second-quarter revenue of approximately $91 billion, plus or minus 2%, surpassing the consensus estimate of $86.84 billion according to LSEG data cited by Reuters.
Despite the strong numbers, some investors chose to book profits, while others questioned whether the sales outlook justifies the company's hefty valuation amid the ongoing AI rally. "Nvidia delivered another beat, but at this point that's essentially priced in," said Jacob Bourne, an analyst at eMarketer. He added that investors now want evidence that the AI buildout has "durability into 2027 and 2028."
AI Dominance Under Scrutiny
The market's focus is shifting from quarterly beats to longer-term questions about Nvidia's competitive position. As demand for AI moves toward "inference"—the stage where trained models are deployed and used—rivals such as Advanced Micro Devices (AMD), Intel (INTC), and Google's custom silicon are targeting the market. Nvidia CEO Jensen Huang told analysts that the company should be "growing faster than hyperscale capex," referring to the massive capital expenditures by major cloud providers. Nvidia has begun calling data centers built for AI "AI factories," and its chips still dominate most of those workloads.
John Belton, portfolio manager at Gabelli Funds, identified the main risk as whether "the Nvidia ecosystem" can maintain its hold as more inference jobs go live. AMD CEO Lisa Su added to the competitive rhetoric on Friday, noting that the CPU market is tight globally, driven by higher demand from AI inferencing and agentic AI—more independent systems. AMD plans to invest over $10 billion in Taiwan's AI industry.
Dividend and Buyback Boost
Nvidia's board raised the quarterly dividend to 25 cents per share from 1 cent, and authorized an additional $80 billion for stock buybacks. These moves signal confidence in the company's financial strength and future prospects, even as the stock faces headwinds.
Wall Street Analysts Remain Bullish
Despite the stock's decline, several Wall Street analysts remain positive on Nvidia. Morgan Stanley analysts continued to call the company an "unassailable" leader and their "best value" pick. Jefferies analysts also stuck with their buy rating, saying the stock "looked remarkably cheap the more it grows," according to Investopedia. However, the risk is that expectations are running ahead of the business's ability to top them. Nvidia's data-center compute forecast still excludes China, there is increasing focus on custom chips, and potential memory or supply shortfalls could hamper shipments even with solid demand.
Upcoming Investor Events
Nvidia is scheduled to appear at TD Cowen's technology, media, and telecom conference on May 28, followed by BofA's global technology conference on June 4. These events may provide further clarity on the company's strategy and outlook. With the U.S. markets closed on Monday, May 25, for Memorial Day, Friday marked the final regular trading session before the holiday break.
