Nvidia’s record earnings fail to ignite stock surge – what’s next?

Key points:

• AI remains a long-term growth driver, but Nvidia’s stock may no longer deliver the explosive gains of the past.
• Investor expectations were sky-high, and while earnings were strong, they weren’t a game-changer—markets were looking for a bigger catalyst to drive stocks meaningfully higher.
• The AI trade is maturing, and future stock gains will depend on execution and new catalysts—watch for hyperscaler spending trends, product rollouts like Blackwell, and broader market sentiment.

Wall Street isn’t easy to impress, and after Nvidia’s meteoric rise, expectations were sky-high. Investors were looking for a “beat and raise” moment—the kind of jaw-dropping numbers Nvidia has delivered in previous quarters. Instead, revenue guidance for Q1 came in at USD 43 billion, slightly above estimates but not the massive beat that would have justified another rally.

Key results:

• Revenue of USD 39.3 billion, up 78% from a year ago (above expectations)
• Net income of USD 22.1 billion (above expectations)
• Guidance for the next quarter: USD 43 billion in revenue (slightly above expectations)

“Expectations were sky-high, and while Nvidia delivered strong results, they weren’t the game-changer investors had hoped for. Fundamentals remain solid, but stock momentum needs a fresh catalyst.”

This isn’t to say Nvidia is in trouble—far from it. Demand for its AI chips remains extraordinary, with CEO Jensen Huang emphasizing that “we are just at the beginning” of the AI revolution. However, as the company grows, delivering the kind of outperformance that fuels further stock surges becomes increasingly difficult.

Investors are asking: is this as good as it gets?

Nvidia’s stock has been on an almost 500% tear over the past two years, making it one of the most valuable companies in the world. But with a market cap exceeding USD 3.2 trillion, the law of large numbers is starting to kick in. For the stock to rise another 10%, it would need to add more than USD 300 billion in market value—nearly twice the size of one of its biggest competitors AMD to put that into perspective. Therefore, some investors are beginning to wonder: have we seen the peak?

“AI demand remains strong for now, but a slowdown in AI infrastructure spending is likely at some point. Eventually, companies will reassess their return on investment, which could lead to a more measured pace of growth for Nvidia.”

A company at the mercy of hyperscalers

Nvidia’s future isn’t just about AI’s growth—it also depends on who’s buying. And right now, a handful of tech giants control a huge chunk of Nvidia’s demand. One key concern is Nvidia’s heavy reliance on hyperscalers—big tech firms like Amazon, Microsoft, and Google, which make up a huge portion of its sales. If these giants cut back on AI spending, Nvidia would feel the impact immediately.

So far, there’s little evidence of that happening. Microsoft and Amazon continue to invest billions in AI infrastructure, and Huang insists that demand remains “insane”. However, history suggests that tech spending moves in cycles. If we enter a phase where companies focus more on monetizing AI rather than just building capacity, spending could slow, and Nvidia’s revenue growth could follow suit.

AI trade still strong, but is the market lacking a catalyst?

Nvidia’s earnings reaffirmed that the AI boom is real. Companies are still racing to build AI-powered services, and Nvidia remains the undisputed leader in providing the hardware behind the revolution. That’s bullish for the broader AI trade. But for the market as a whole? The reaction was more muted. Stocks have been in a sluggish mood recently, and some investors hoped that Nvidia’s results would act as a catalyst to push markets higher. That didn’t happen. While tech stocks didn’t fall, they also didn’t get the euphoric rally some were betting on.

“Nvidia’s results were strong, but they weren’t the kind of surprise that reignites market momentum. It’s a sign that AI’s easy-money phase may be giving way to a more selective investment environment.”

Moreover, broader market conditions play a role. Tech stocks have faced headwinds recently, and while AI remains a key long-term theme, short-term market sentiment is fragile, making it harder for stocks—even industry leaders like Nvidia—to sustain big moves.

Key lessons for investors

For investors, the key takeaway is tempered expectations. Nvidia is still a phenomenal company, and AI is still an incredible growth driver. But at its size, Nvidia can’t triple revenue forever, and the stock will likely behave more like a mega-cap tech stock than a high-flying disruptor from here on out. That doesn’t mean that the AI trade is dead—it just means we may be entering a more measured phase where valuations need to catch up to fundamentals.

For long-term investors, Nvidia remains a dominant player in AI. But for those looking for another explosive rally, the bar is now much higher. So don’t expect a repeat of the 500% rally—the law of large numbers makes it harder for Nvidia to sustain extreme gains. The AI boom isn’t over—but it might not be as easy as before.