NVIDIA’s shares swung after it released record-breaking first quarter results, dipping as much as 2%, before clawing back to a 1.3% gain in the early hours of this morning to make the company worth $5.34 trillion.
The Wall Street Journal reported that the world’s most valuable company saw its share price fall for three consecutive days ahead of its first-quarter results, before rebounding in Wednesday trading ahead of the earnings release. The stock closed the session up 18% for the year.
Its current value is a stark decline from when NVIDIA neared the $6 trillion mark on 14 May, with Bloomberg reporting it had gained 20% in the past week up to that date to close at $253.74, making it worth $5.7 trillion. Had it hit $6 trillion, it would have been the first company in the world to achieve that milestone.
Peter Takaendesa, chief investment officer at Mergence Investment Managers, says: “NVIDIA was slightly ahead of sell-side expectations but looks largely in line with fund managers’ expectations, especially on the outlook statement, which was the market’s focus on the results.”
Takaendesa notes the share price coming off a bit after hours tallies with expectations from fund managers. Yet, FX Street’s Clay Webster says: “The stock doesn’t seem to know what to do.”
AI stock performance is not currently a one-size-fits-all scenario “as a big gap has opened in the performance of stocks that are participating at different phases and levels of the AI value chain,” adds Takaendesa.
Tech as cure-all
The results come as tech stocks broadly continue to attract investor interest regardless of market conditions.
Kriti Gupta, executive director and global investment strategist at JP Morgan Private Bank, has said: “When investors are excited about AI, they have bought tech. When they’re worried about inflation, they bought tech. When looking for outperformance, they bought tech. When thinking about sustainability, they bought tech.”
Gupta adds: “When they wanted to invest in growth, they bought tech. When they wanted to lean into the capex cycle, they bought tech. When worried about the world and in need of a company with a cash cushion, they bought tech.
“We believe the truth is no one really knows at this stage who the ultimate winners will be and we can expect to see shifts in those views as time goes on. Investors who want to play this theme should diversify their investments in that space rather than chase a particular stock,” says Takaendesa.
Record numbers
The California-based company posted record revenue of $81.6 billion, up 85% year-on-year and 20% from the previous quarter, with diluted earnings per share gaining 140% to come in at $1.87 – both of which exceeded analysts’ expectations based on a poll by FactSet, which had anticipated $1.75 a share on sales of $78.9 billion.
Net income gained 139% year-on-year to $45.5 billion.
NVIDIA also projected second-quarter revenue between $89.18 billion and $92.82 billion, which Webster writes is well above Wall Street consensus estimates of around $86 billion to $87 billion.
Webster says the revenue gain was off the back of $75.2 billion in data centre revenue, “up an impressive 92% from a year ago,” surpassing estimates of $73.48 billion.
Data revenue was driven by the ramp-up of its Blackwell 300 products and demand for foundational networking and interconnect technologies InfiniBand, Spectrum-X Ethernet and NVLink, says Colette Kress, NVIDIA CFO.
The company is set to continue to construct this infrastructure, with Jensen Huang, founder and CEO of NVIDIA, saying: “The buildout of AI factories − the largest infrastructure expansion in human history − is accelerating at extraordinary speed.”
Spending power
Takaendesa says: “Demand for chips and AI infrastructure remains very strong and the 2026 capex commitments from the other ‘Magnificent Seven’ companies continue to provide an underpin to chipmakers’ order books.
“Obviously this demand will slow down at some stage just like all other tech hardware cycles, but it looks like we are not there yet.”
The Magnificent Seven are guiding the market that they will spend more than $700 billion in AI-related capital investment in 2026 alone, says Takaendesa. “Cash flows will surely be challenged over the short-term as they accelerate these AI capital investments.”
* All figures are reported in US dollars as per NVIDIA’s reporting currency. For context, the local currency was trading at R16.51 this morning.
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