NVIDIA tops expectations, stock falls

NVIDIA reported another quarter of breakneck growth on May 20, posting fiscal first-quarter revenue of $81.6 billion and data-center revenue of $75.2 billion, then watched its stock fall anyway. The company also raised its dividend, added $80 billion to its share repurchase authorization and said demand for AI systems remained strong. By the May 22 close, NVIDIA shares had slipped to $215.33, down 1.9% on the day, according to the company’s investor page. That split — stronger numbers, weaker stock — is the center of the story. NVIDIA’s results showed that hyperscale and enterprise AI spending is still expanding, but the market response suggested investors wanted more than another beat-and-raise quarter from the company that has defined the AI trade. ### If NVIDIA beat on revenue, profit and guidance, why did the stock fall? (investor.nvidia.com) NVIDIA said first-quarter revenue rose 85% from a year earlier to $81.6 billion, while GAAP diluted earnings per share were $2.39 and non-GAAP diluted earnings per share were $1.87. The company said gross margin was 74.9% on a GAAP basis and 75.0% on a non-GAAP basis. (investor.nvidia.com) The stock reaction came after months in which NVIDIA had already climbed sharply. NVIDIA’s investor page shows the shares closed at $223.47 on May 20, the day of the earnings release, before ending May 22 at $215.33. That left investors focusing less on whether demand was strong — the numbers answered that — and more on how much upside remained after expectations had already risen. (investor.nvidia.com) ### What in the quarter showed AI demand is still running hot? NVIDIA said data-center revenue reached a record $75.2 billion, up 92% from a year earlier. Jensen Huang, NVIDIA’s chief executive, said in the earnings release that “the buildout of AI factories” was accelerating and that agentic AI was scaling across companies and industries. (investor.nvidia.com) Under NVIDIA’s previous reporting format, the company said data-center compute revenue was $60.4 billion and data-center networking revenue was $14.8 billion. The networking figure was up 199% from a year earlier and 35% sequentially, a sign that spending is not limited to GPUs but extends to the systems that connect AI clusters inside data centers. (investor.nvidia.com) ### Why are investors looking beyond GPUs now? NVIDIA’s $14.8 billion quarterly networking revenue has drawn attention because it puts a second business line at unusual scale. Broadcom said in December that its fourth-quarter 2025 revenue was $18.0 billion and that AI semiconductor revenue rose 74% year over year, with first-quarter fiscal 2026 AI semiconductor revenue expected to reach $8.2 billion. (investor.nvidia.com) Those figures are not a like-for-like comparison, but they show why investors are broadening the AI lens. NVIDIA is selling more of the fabric around AI systems, while Broadcom remains a major supplier of custom AI chips and Ethernet switching. The comparison matters because it shifts attention from a single chip winner to the wider hardware stack. (investors.broadcom.com) ### Why did Navitas jump on the same theme? Navitas Semiconductor said on May 5 that first-quarter 2026 revenue rose 18% sequentially to $8.6 million, driven by high-power markets including AI data centers, grid and energy infrastructure. Chief Executive Chris Allexandre said the company’s GaN and silicon-carbide products were aimed at the “power, density and efficiency needs” of AI systems. (investor.nvidia.com) By the May 22 close, Navitas shares had risen 19.98% to $29.25, according to Yahoo Finance. The move showed that investors were also rewarding companies tied to AI power delivery and electrical infrastructure, not only the makers of processors and servers. ### What are investors watching next? June 26 is NVIDIA’s next scheduled dividend payment date, with shareholders of record on June 4 eligible after the company raised the quarterly cash dividend to $0.25 per share from $0.01. (ir.navitassemi.com) NVIDIA also said it had $38.5 billion remaining on its prior buyback authorization at quarter-end and added a new $80 billion authorization on May 18. (finance.yahoo.com) Broadcom’s next quarterly results and further updates from suppliers tied to AI networking and power systems will give investors the next read on whether spending is still broadening across the stack. For now, NVIDIA’s quarter showed demand is still there; the stock reaction showed that the market is asking harder questions about valuation and where the next gains will show up. (investor.nvidia.com)