Nvidia stumbles on Wall Street’s high bar. Can the bull run last?

Nvidia has delivered yet another earnings report proving that demand for artificial intelligence continues to grow, driving the company’s business forward. Since 2023, the firm has held an almost monopolistic position in the AI chip market. However, the stock slipped 2.6% in after-hours trading, with Wall Street’s final “verdict” likely to come only at tomorrow’s market open.

Despite the company’s impressive growth momentum, investors responded with slight caution. Revenue in the data center (AI) segment fell short of expectations by a symbolic $200 million, rising 5% quarter-on-quarter and 56% year-on-year to $41.1 billion. Analysts had recently raised forecasts, joining the wave of optimism, but with Nvidia’s increasingly demanding valuation, even the smallest “crack in the glass” could prove costly — not only for the company but for Wall Street as a whole.

The risk of concentration is significant, as Nvidia currently accounts for about 10% of the Nasdaq 100 and nearly 8% of the S&P 500. Over the past two years, this concentration has benefited equity markets, with Nvidia’s growth consistently exceeding expectations despite its massive scale. Such momentum has dazzled investors, reinforcing the belief that similar growth can continue in the coming quarters and years. Yet, today’s valuation would appear detached from fundamentals if Nvidia’s data center business were to meaningfully slow — a scenario for which there are currently no clear signs.

A $200 million shortfall against the backdrop of $41 billion in revenue is hardly material, and it would be a mistake to assign it “strategic” significance. Moreover, the company excluded suspended sales of H20 chips to China from its results and guided for revenue of around $54 billion next quarter. Shares are edging lower post-report, but the numbers reaffirm that AI remains firmly in the spotlight. Meanwhile, other segments — including gaming, visualization, and automotive solutions — continue to perform strongly.

Sales of Blackwell chips rose 17% quarter-on-quarter, more than three times the overall growth rate in the data center segment. Net income and revenue growth on a year-over-year basis remain striking. These results should not be seen as a cause for concern, and Wall Street may not be ready to sell Nvidia stock until the first “surprisingly weak report” appears — something that is still nowhere on the horizon today.

Eryk Szmyd, Financial Markets Analyst, XTB