Nvidia (NVDA) shares edged lower on Tuesday, falling 55 cents to $214.86, even as the broader market surged to new all-time highs. The S&P 500 gained 0.61%, and the Nasdaq climbed 1.19%, both closing at record levels. The Philadelphia semiconductor index also hit a fresh record, driven by strong gains in other chip stocks, including Micron (MU) jumping 19%, Qualcomm (QCOM) rising about 4.5%, and Marvell (MRVL) adding 6%.
The divergence between Nvidia's performance and the broader market highlights a shift in investor sentiment. While Nvidia remains the dominant player in artificial intelligence (AI) chips, its massive market capitalization—around $5.24 trillion—means even small price movements can have outsized impacts on major indices. The stock traded between $212.04 and $218.45 during the session, reflecting ongoing uncertainty about its near-term trajectory.
Earnings Beat and Strong Guidance
Nvidia reported first-quarter revenue of $81.6 billion, an 85% increase year-over-year. Data center revenue, a key driver of growth, reached $75.2 billion, up 92% from the prior year. The company guided for second-quarter revenue of approximately $91 billion, plus or minus 2%, and announced an additional $80 billion share buyback program. The quarterly dividend was raised to 25 cents per share.
CEO Jensen Huang highlighted the arrival of "Agentic AI," describing software that operates more independently of human input. This narrative has fueled investor enthusiasm, but the stock's muted reaction suggests that much of the optimism is already priced in. Nvidia options were pricing in a post-earnings move of about 6.5%, which would represent a $350 billion swing in market value.
China Remains a Wild Card
China continues to be a significant risk factor for Nvidia. First-quarter revenue from China, including Hong Kong, fell to $4.55 billion from $9.66 billion a year earlier, as U.S. export restrictions on advanced chips took a toll. Huang noted that the company's $200 billion CPU market forecast includes China, and he called it "terrific" if H200 shipments could reach the country. However, Reuters reported that no H200 chips have been shipped to China yet, despite the issuance of U.S. licenses.
The company's filing also revealed that three direct customers accounted for 21%, 17%, and 16% of total revenue, respectively. Nvidia warned that future revenue could be impacted by constraints related to data center capacity, energy availability, and capital expenditure limits. If export approvals stall or major buyers pull back, the stock's premium valuation could come under pressure.
Market Context and Investor Sentiment
Chris Zaccarelli, chief investment officer at Northlight Asset Management, described this year's tech rally as "reminiscent of the boom at the end of the 1990s." Meanwhile, Matt Amberson of ORATS told Reuters that investors appeared "complacent about AI/capex," referring to capital expenditure spending. This complacency could be tested if macroeconomic headwinds or regulatory challenges emerge.
The broader chip sector saw selective buying, with many stocks advancing even as Nvidia lagged. This marks a shift from previous sessions where Nvidia led the rally. The next phase for the stock will depend not just on AI demand—which recent numbers confirm is robust—but on Nvidia's ability to convert that demand into shipments, margins, and cash flow as competitors and regulators close in.
