Introduction: Nvidia fails to wow Wall Avenue with blockbuster quarter
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What’s a tech agency gotta do to get a share worth bump nowadays?
Nvidia could also be asking that query after reporting sturdy earnings final evening, alongside a strong progress forecast, solely to obtain a shrug from Wall Avenue.
The chip-making agency actually had one other extraordinarily sturdy quarter – it posted file quarterly income of $68.1bn for October-December 2025, up 20% in contrast with the third quarter of final 12 months and a scorching 73% greater than a 12 months earlier.
The corporate stated gross sales had been being pushed by accelerated computing and AI, with prospects scrambling to get their palms on its high-powered Blackwell chip.
Jensen Huang, founder and CEO of Nvidia, instructed buyers that take-up of AI brokers by corporations was accelerating:
double citation mark“Enterprise adoption of brokers is skyrocketing. Our prospects are racing to put money into AI compute — the factories powering the AI industrial revolution and their future progress.”
Nvidia additionally predicted one other soar in gross sales within the present quarter, when income is anticipated to rise to $78.0bn, beating forecasts.
However whereas its shares did briefly rally in after-hours buying and selling when the outcomes hit the wires, this didn’t final – the inventory then turned adverse, and at last completed simply 0.2% greater.
As Jim Reid of Deutsche Financial institution places it:
double citation markThe initially optimistic response pale as the corporate’s convention name provided restricted element on the income outlook, leaving the chipmaker’s shares little modified by the top of prolonged buying and selling. So maybe an indication of buyers’ elevated anxiousness over AI valuations.
Nvidia’s downside is partly that its share are already ‘priced for perfection’ – up 1,300% over the past 5 years. So even stellar gross sales progress is already priced in.
Additionally, these outcomes landed in a market the place buyers are fretting that AI will drive up white-collar unemployment, take enterprise away from software-as-a-service corporations, fee suppliers and journey and property companies, and set off a mortgage crash.
Kathleen Brooks, analysis director at XTB, says there are just a few elements behind the muted response to what she calls “Nvidia’s A* earnings report”:
double citation markNvidia and the semiconductor area has outperformed the broader tech sector thus far this 12 months. Nvidia’s outcomes counsel that demand for AI is robust, and fears of an AI bubble are overdone. Thus, buyers may pile into the much less liked components of tech, for instance software program, earlier than going headfirst into Nvidia. The Nasdaq e-mini contract is greater by 1.4% after Nvidia’s earnings report.
Secondly, this report didn’t generate a lot motive for disappointment, besides, some buyers might have hoped that CEO Jensen Huang would increase gross sales pipeline estimates for this 12 months above $500bn. Huang was additionally requested about hyperscalers’ and their future capex plans now that there was some stress on their money flows. This didn’t hassle Huang, but it surely may sow a seed of doubt within the thoughts of buyers.
General, the preliminary response to Nvidia’s outcomes counsel that buyers are nonetheless unwilling to chase the next development in tech shares proper now, even after Nvidia’s beautiful earnings report. This report will seemingly be pored over intimately on Thursday, however for now it’s not driving a major rally within the share worth.
The agenda
8.30am GMT: Christine Lagarde testifies to the Committee on Financial and Financial Affairs (ECON) of the European Parliament
9.30am GMT: UK’s ONS publishes newest quarterly NEETs information
1.30pm GMT: US weekly jobless claims
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