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Nvidia Stock Dips Despite Blockbuster Earnings: Investors Make a Costly Mistake

By James Seidel | CC News Network

SANTA CLARA, CA — Nvidia Corp. (NVDA) shares fell Thursday despite the AI chip giant reporting stronger-than-expected quarterly earnings, a move that raises serious questions about the intelligence of investors dumping one of the best-performing stocks in the market.

The Santa Clara-based company posted fiscal fourth-quarter revenue of $39.3 billion, a staggering 78% increase from the previous year. While this marks a slowdown from the 265% surge reported a year earlier, the company remains on an explosive growth trajectory that most firms can only dream of.

AI Boom Fuels Record Data-Center Revenue

Nvidia’s key data-center segment, which powers artificial intelligence computing for industry titans like Microsoft (MSFT) and Amazon (AMZN), generated a record-breaking $35.6 billion in revenue, up 93% year over year. However, the growth rate cooled compared with last year’s astronomical 409% increase.

The company anticipates first-quarter revenue of approximately $43 billion, a year-over-year jump of about 65%.

“The demand for Blackwell is extraordinary. AI is evolving beyond perception and generative AI into reasoning,” Nvidia CEO Jensen Huang said.

Despite these remarkable numbers, investors panicked over slowing growth rates, seemingly forgetting that no company can sustain triple-digit percentage growth indefinitely. The decision to dump Nvidia stock on the basis of marginally lower profit margins reflects a fundamental misunderstanding of the company’s dominant position in AI computing.

Margins Under Pressure, But Long-Term Strength Intact

Nvidia reported a non-GAAP gross profit margin of 73.5%, down 3.2 percentage points from a year earlier. The decline was attributed to higher production costs associated with newer, more complex data-center products.

“Initially, we are focused on expediting the manufacturing of Blackwell systems to meet strong customer demand as they race to build out Blackwell infrastructure,” Chief Financial Officer Colette Kress said during the earnings call. “When fully ramped, we have many opportunities to improve the cost, and gross margin will improve and return to the mid-70s late this fiscal year.”

Analysts appeared unshaken by the minor margin squeeze. UBS analyst Timothy Arcuri pointed out that while gross margins were slightly below expectations, the shift in product mix was the primary driver. He reiterated a buy rating with a price target of $185.

Morgan Stanley analyst Joseph Moore noted that while Nvidia’s latest earnings weren’t “perfect,” the margin pressures were well documented and likely temporary. He raised his price target to $162 from $152, calling the quarter a “transitional phase in a remarkable growth cycle.”

Wall Street Remains Bullish, Unlike Short-Sighted Sellers

Bank of America reiterated a buy rating on Nvidia, increasing its price target to $200, citing the company’s leadership in AI computing, robotics, and agentic applications. The firm emphasized that Nvidia’s valuation remains “compelling,” especially given its product pipeline and continued dominance in the AI sector.

“We understand the desire to diversify portfolios away from AI/cloud, but we believe this underappreciates the solid (and global) pace of AI investments and Nvidia’s compelling valuation,” Bank of America stated.

J.P. Morgan also maintained an overweight rating with a $170 price target, stating that Nvidia is “further distancing itself from competitors with its aggressive product launches and segmentation strategies.”

Citi reaffirmed its buy rating with a $163 price target, noting that demand for Nvidia’s AI chips continues to outstrip supply. The firm did caution that potential China restrictions, tariffs, and margin pressures could keep the stock range-bound in the short term.

Investor Panic: A Classic Overreaction

Nvidia’s stock has skyrocketed 171% over the past year, yet it has dipped 1% over the past six months, as some investors flee at the first sign of slower—but still spectacular—growth. The move highlights the irrationality of short-term market reactions. Nvidia remains the dominant force in AI, an industry still in its infancy. Investors dumping shares now may look back in regret as the company continues its long-term ascent.

For those not weak or small minded with a grasp on the bigger picture, Nvidia remains one of the most powerful investment opportunities in modern history. Short-sighted sellers may be handing over their golden ticket to those who understand the AI revolution is far from over.