NVIDIA's earnings report is so "blowout," but why is the market "keeping a cool eye" on it?

NVIDIA delivers far better-than-expected earnings and guidance, but fails to reignite the stock price. Market concerns about the sustainability of AI demand and supply constraints are overshadowing the impressive “numbers themselves.”

NVIDIA provided a fiscal first-quarter revenue guidance of approximately $78 billion, significantly above Wall Street’s average expectation of $72.8 billion. However, during the analyst call, the stock price briefly fell about 1.5%, and by the end of the day, it was nearly flat.

With this earnings report, NVIDIA has now exceeded expectations for 14 consecutive quarters. Analysts note that investor expectations for NVIDIA’s “inherent high performance” have been raised to new heights. Simply “beating expectations again” is no longer enough to generate additional premium. The market is more eager for stronger assurances that the AI boom can continue.

Management has attempted to address these concerns positively. Jensen Huang emphasized that customers are profiting from new computing power, and investments will remain high; CFO Colette Kress said the company has secured key supplies and extended shipment commitments over a longer cycle.

Guidance is strong, but the market still feels “it’s missing a final push”

NVIDIA’s first-quarter revenue guidance is about $78 billion. Although this exceeds analysts’ consensus, it falls short of some more aggressive forecasts near $80 billion. This makes “beat expectations” less impressive on the margin.

Looking at stock reactions, strong guidance hasn’t translated into sustained upward momentum and instead saw a dip during the call. The market signals are clear: investors are raising their thresholds for certainty to evaluate the growth quality and longevity of the AI leader.

Core business remains robust, but non-data center segments drag behind

NVIDIA’s fiscal Q4 revenue grew 73% to $68.1 billion. Excluding some items, EPS was $1.62, with an adjusted gross margin of 75.2%, all surpassing market expectations.

The main growth driver remains the data center segment, which generated $62.3 billion in revenue this quarter, above the analyst average of $60.4 billion.

However, other segments underperformed, with gaming revenue at $3.73 billion, below the expected $4.01 billion; automotive revenue at $604 million, also below the forecast of $643 million. This structural divergence has heightened market sensitivity to “growth relying more on a single engine.”

“Overheating” and return rate concerns persist; investors seek stronger evidence of sustainability

According to analysis, amid recent volatile AI trading sentiment and investor worries about input-output ratios and industry disruption costs, the market no longer views AI as a “rising tide that lifts all boats.”

Jensen Huang tried to steer the discussion back to customer returns during the call, stating that customers are already profiting from added computing power, and will continue to invest at high levels. He also said, “Computing power translates into growth, which translates into revenue,” expressing confidence in cash flow growth for customers.

For investors, the key question is whether such statements can be sustained and validated through orders, deliveries, and future guidance.

Supply constraints and “massive long-term orders” coexist; optimistic narratives still need delivery to materialize

CFO Colette Kress said the company has secured enough components to meet demand growth, and has prepared inventory and supply commitments for future needs, with shipments extended to 2027.

Current Blackwell product lines and upcoming Rubin are still expected to outperform previous sales forecasts. The company previously stated that related chips would generate $500 billion in revenue by the end of 2026.

Another variable is the supply chain. Analysts note that memory chip shortages have driven up prices and affected device shipments, also dragging down gaming business, and Kress said it’s uncertain whether this issue will ease enough this year to support growth.

On the demand side, NVIDIA announced Meta Platforms will deploy “millions” of NVIDIA processors over the next few years; meanwhile, AMD also announced a long-term agreement with Meta, worth hundreds of billions of dollars.

However, such deals have faced criticism due to potential cross-shareholdings between suppliers and customers, raising concerns that they might artificially inflate demand. Ultimately, the market’s outlook depends on delivery pace, the resolution of supply bottlenecks, and the realization of customer cash flows.

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