Nvidia's share price falls despite strong earnings results

It has seen the company become one of the most valuable in the world; one of three valued at more than three trillion dollars, alongside Microsoft and Apple.

But some have noted that Nvidia’s rate of growth is starting to slow, and wider fears have been raised about increasing competition with chip rivals and the surge in tech stocks being a bubble, which prompted a drop in the firm’s share price in after-hours trading on Wednesday, and the dip after markets reopened on Thursday.

Kate Leaman, chief market analyst at AvaTrade, said: “Nvidia reported strong quarterly earnings, driven by high demand for AI chips, especially from major cloud providers like Microsoft, Google and Amazon.

“The company’s data centre sales hit record highs, positioning it well for future growth. Nvidia CEO Jensen Huang highlighted the upcoming Blackwell platform as a potential game-changer, though supply is currently lagging behind demand.

“The firm’s existing Hopper chips also remain popular as companies build AI infrastructure.

“Nevertheless, in spite of these positives, the AI chip manufacturer saw its share price drop nearly 7 per cent (in after-hours trading) as the revenue outlook didn’t quite meet investor expectations.

“The company’s profit margins are expected to stay high, around 75 per cent, but might dip slightly in the second half of the fiscal year.

“What’s more, although Nvidia’s revenue grew, the pace has been slowing over the past year. The company also spent $7.2bn (£5.4bn) on stock buybacks this quarter, more than double what it spent last year.

“Although Nvidia is set for future success, and is expecting big revenue from its upcoming Blackwell platform later this year, there are concerns about slowing growth, competition in China, and overall market jitters, which is affecting related stocks like AMD and Dell.

“It is also facing potential challenges in the form of supply constraints and high market expectations, issues investors must continue to monitor as they evolve.”

Dan Coatsworth, investment analyst at AJ Bell, said: “Nvidia managed to claw back some of the big share price losses seen in after-hours trading after its results were published. That suggests investors have taken time to consider the pros and cons of the numbers and commentary, with many deciding the AI party is far from over.”

On Wednesday, the company reported record quarterly revenue of $30bn (£22.7bn), which was up 15 per cent on the last quarter, and up 122 per cent on the same period a year ago.

Looking ahead to the next quarter, the company said it expected revenue to rise again, forecasting it to be about $32.5bn (£24.7bn).

Chief executive Jensen Huang said the company had “achieved record revenues as global data centres are in full throttle to modernise the entire computing stack with accelerated computing and generative AI”.