Nvidia Stock Dips 5.5% Post-Earnings
Nvidia's stock tumbled 5.5% in its steepest drop in nearly a year, despite earnings that met expectations. The selloff reflects investor anxiety over the sustainability of its AI-driven growth, though the stock is now trading at its most attractive valuation in almost a year.
Despite the stock dip, Nvidia's fourth-quarter earnings report detailed a "triple beat," with revenue of $68.1 billion and earnings per share of $1.62, both surpassing Wall Street expectations. For the full fiscal year, the company generated a record $215.9 billion in revenue, a 65% increase from the prior year. The company's Data Center segment was the primary growth engine, reporting a record $62.3 billion in quarterly revenue, a 75% increase year-over-year. This single division accounted for over 91% of Nvidia's total revenue for the quarter, highlighting the massive demand from AI infrastructure buildouts. Investor anxiety appears rooted in the sustainability of this growth, with reports that just two major customers, likely Microsoft and Meta, accounted for 36% of total revenue. This concentration has sparked concerns that major clients may be nearing a saturation point in their AI hardware acquisition phase. Adding to market jitters are proposed new U.S. export restrictions on AI chips. The Commerce Department has drafted regulations that could require government approval for AI chip sales to nearly any country, creating uncertainty around Nvidia's critical international sales pipeline. Despite the selloff, some analysts see a buying opportunity. Morgan Stanley recently reinstated Nvidia as its top semiconductor pick, citing a disconnect between the stock's flat performance over two quarters and the business's continued growth. The firm noted the current valuation is a "surprisingly good entry point." Looking ahead, investors are focused on Nvidia's upcoming GTC conference for details on its next-generation "Rubin" chip platform. Analysts suggest that hyperscalers are already signing three-year supply contracts, some with full prepayments, indicating that high-level demand is locked in well beyond 2026.
