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Nvidia’s (NASDAQ:NVDA) latest earnings reinforced its dominance in the artificial intelligence chip market, yet investors reacted cautiously. Record sales and robust margins failed to prevent a pullback in the share price, underscoring just how high the bar has become for the world’s most valuable company.
Record Quarter, But Slower Pace
For the fiscal second quarter, Nvidia delivered $41.1 billion in data center sales, a 56% year-over-year increase. That’s extraordinary by any historical measure, yet it marks the slowest growth rate in more than two years. The stock lost about 3% after hours, as investors digested results that, while impressive, fell just short of Wall Street’s lofty targets.
Shares had already surged 65% since April, outperforming Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), and Meta (NASDAQ:META) — the very customers fueling demand for Nvidia’s chips. With the company now worth more than $4 trillion, the bar for upside keeps getting higher.
Margins Show Pricing Power
One bright spot: profitability. Gross margins hit 72.4%, far above the low-60% range Nvidia averaged before the AI boom. Management expects margins to stay in the mid-70s by year-end, suggesting Nvidia still has pricing power even as competition intensifies.
That’s crucial because rivals like AMD and in-house chips from Amazon and Google are starting to nibble at market share. For now, Nvidia remains the undisputed leader in the high-performance chips powering generative AI, but investors must weigh how sustainable these margins are.
Trade War Risks Remain
Geopolitics continues to complicate the outlook. Sales of the H20 chip to China remain stalled, despite the Trump administration’s recent green light. Nvidia has yet to ship units and is navigating unresolved questions around a potential 15% revenue cut demanded by U.S. authorities for China-related sales.
If approvals lag or new restrictions emerge, near-term revenue could fall short of guidance. The company already warned it may not deliver any H20 shipments this quarter.
Stock Outlook: Can Momentum Hold?
|
Asset |
Current Price |
Key Support |
Resistance |
Bias |
|
Nvidia ($NVDA) |
$1,180 |
$1,100 |
$1,250 |
Neutral-to-bullish |
|
Nasdaq 100 |
18,420 |
18,000 |
18,700 |
Supported by AI sector |
Technically, Nvidia remains in an uptrend, but the stock’s reaction shows investors are increasingly sensitive to any growth miss. Support sits near $1,100; a break below could open room to $1,000. On the upside, a sustained move above $1,250 would confirm that buyers are still willing to push valuations higher despite slowing growth.
Bottom Line
Nvidia’s “new normal” is still extraordinary: double-digit growth, dominant market share, and premium margins. But with a $4 trillion valuation, even small disappointments can jolt the stock. Investors betting on further gains need to weigh whether AI momentum alone can overcome slowing growth, rising competition, and geopolitical risks.
For now, Nvidia remains the market’s kingmaker — but the crown is starting to feel heavy.