Nvidia Stock Falls 5% Despite 'Blowout' Earnings Report
Nvidia's stock fell 5% in trading despite the company reporting record earnings that surpassed analyst forecasts. The negative market reaction suggests Wall Street's expectations were exceptionally high, and the results were not enough to sustain the stock's rally. The reversal in the bellwether AI stock has raised concerns about overextended valuations in the technology sector and potential cross-asset volatility.
Nvidia's fourth-quarter revenue surged to a record $68.1 billion, a 73% increase year-over-year, with record full-year revenue of $215.9 billion, up 65%. The company's data center division was the primary driver, posting record quarterly revenue of $62.3 billion, a 75% increase from the previous year. This growth reflects the massive investments by tech companies in AI infrastructure. Despite the record-breaking figures that surpassed Wall Street's already high expectations, the stock's decline suggests the bar for Nvidia was set even higher. The company reported earnings of $1.62 per share, beating analyst estimates of $1.53, on revenues that also topped forecasts. For its first quarter of fiscal 2027, Nvidia projected revenue of $78.0 billion, plus or minus 2%, again exceeding analyst predictions. The negative stock reaction erased approximately $260 billion in market value in a single day, marking the largest single-day drop in nearly three quarters. This downturn is attributed to concerns that the stock's valuation already priced in the stellar growth, with investors now looking for the next major catalyst to justify further gains. Intensifying competition is a significant factor, with rivals making notable advances. Just days before Nvidia's report, AMD and Meta announced a five-year AI chip supply agreement valued at between $60 billion and $100 billion. This, along with accelerated chip development from Google and Amazon, is challenging Nvidia's long-held dominance in the AI chip market, where it has held over 80% market share.
