6 days ago
NVIDIA Earnings Beat, But High Expectations Temper Stock Outlook
NVIDIA makes chips used for artificial intelligence, and its latest results were very strong.
Its revenue more than doubled to $96.2 billion in the July quarter.
The company also expects about $108 billion in revenue next quarter.
Analysts said many different customers are now buying AI systems, not just a few very large technology companies.
This suggests the AI boom may continue for several years.
However, investors already expect a lot from NVIDIA, so strong results may not always push the share price higher.
Some analysts think the stock could move sideways or fall temporarily.
Higher component costs and competition that lowers AI prices are additional concerns.
Technical analysts said investors may watch the $188 support area before expecting another possible rally.
NVIDIA’s July-quarter revenue more than doubled year over year to $96.2 billion.
Adjusted earnings reached $2.22 per share, while third-quarter revenue guidance was $108 billion, plus or minus 2%.
The company expects roughly 70% revenue growth for the financial year ending January 2028.
Analysts said AI demand is broadening, but elevated expectations, margins, and crowded positioning could trigger consolidation.
Technical analysts identified a $188-$232 trading range, with $188 as an important support level.
- Who
- NVIDIA, its CEO, investors, and analysts including Gaurav Arora, Pravesh Gour, Harshal Dasani, Vipin Kumar, and Aditya Thukral.
- What
- NVIDIA reported stronger-than-expected quarterly results and issued robust guidance, while analysts debated whether its stock can continue rising.
- Where
- NVIDIA shares traded on Nasdaq, while the company’s AI demand spans global laboratories, enterprises, sovereign customers, and industrial users.
- When
- The results covered the July quarter; the stock closed down 1.59% at $209.66 on August 26.
- Why
- Revenue growth is being driven by AI infrastructure spending, but high valuations, rising costs, competition, and crowded positioning may limit further gains.
Bullish View
Cautious View
AI demand
Bullish View
Analysts said demand is broadening beyond a few hyperscalers to AI labs, enterprises, sovereign customers, and industrial applications.
Cautious View
Competition and falling inference prices, including pressure attributed to DeepSeek and Chinese AI labs, could reduce the revenue supporting large AI investments.
Stock outlook
Bullish View
Strong guidance and continued AI infrastructure spending could support another rally; technical analysts said the long-term trend remains upward.
Cautious View
Expectations are extremely high, and NVIDIA stock has fallen after each of its last four earnings reports despite beating estimates, making consolidation or a correction possible.
Valuation and risks
Bullish View
A correction could represent a valuation reset rather than the end of the multiyear AI cycle, provided AI capital spending and NVIDIA’s guidance remain strong.
Cautious View
Crowded positioning, rising bond yields, higher component costs, and a decline in third-quarter gross-margin guidance to 74% from 75% create pressure on the shares.
Key facts
- July-quarter revenue
- $96.2 billion, more than double the year-earlier figure
- Adjusted earnings
- $2.22 per share
- Third-quarter revenue guidance
- $108 billion, plus or minus 2%
- Long-term revenue outlook
- Approximately 70% growth for the financial year ending January 2028
- Year-to-date stock performance
- Up 11%
- Reported closing price
- $209.66 on August 26, after a 1.59% decline
- Technical trading range
- Approximately $188 to $232, with $188 identified as important support
Quotes
Gaurav Arora
Head of research at SAHI
“Revenue more than doubled YoY to $96.2 billion, comfortably beating the company’s own guidance, and EPS also came in well above estimates. What stands out is that the revenue beat was bigger than the earnings beat, which points to genuine demand rather than just cost-cutting. NVIDIA’s CEO also stated that AI has ‘reached its inflection point,’ with many more companies now building large GPU clusters, not just one or two big players. In short, the AI trade is broadening, not fading.”
livemint.com
“The AI trade can remain hot in the near term, but a correction or consolidation is quite possible after the strong rally. I would view any correction as a potential valuation reset rather than the end of the AI cycle, unless we see a meaningful slowdown in hyperscaler AI capex or NVIDIA’s future guidance.”
livemint.com
Sources
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