When Blowout Earnings Aren't Enough
Here's a problem most CEOs would love to have: your company posts incredible numbers, and the market shrugs. That's exactly what happened to Nvidia Corp (NVDA) this week, and CEO Jensen Huang wasn't hiding his disappointment.
During a company meeting on Thursday, Huang reportedly told employees that the market "did not appreciate" what he characterized as an exceptional quarter. The stock had surged Wednesday after earnings, only to reverse course Thursday as broader AI jitters resurfaced.
Huang's comments reveal something interesting about where Nvidia finds itself right now. He acknowledged the company faces a "no-win" situation because of its enormous economic influence. People are literally discussing online whether the chip designer's performance could single-handedly prevent a U.S. recession. That's the kind of pressure that makes even stellar results feel inadequate.
In a moment of humor that probably felt less funny than it sounds, Huang reminisced about the "good old days" when Nvidia had a $5 trillion market cap. Today? A mere $4.3 trillion. The company did not immediately respond to requests for comment.
The AI Skepticism Grows Louder
So what's eating at investors? It's not Nvidia's execution, which remains impressive. Instead, Wall Street is getting increasingly nervous about the sky-high valuations across AI companies and the breakneck pace of infrastructure spending by tech giants like Amazon (AMZN), Meta (META), and Oracle (ORCL). These companies are pouring billions into data centers to support generative AI, and some investors are wondering when the payoff arrives.
Investor Michael Burry recently took aim at Nvidia's capital allocation strategy, specifically its aggressive stock buyback program. Burry claims these buybacks have delivered zero shareholder value, adding another layer of criticism to the mix.
Not everyone's pessimistic, though. Wedbush analyst Dan Ives framed Nvidia's latest results as a crucial "validation moment" for the AI boom, Thursday's sell-off notwithstanding. Ives pushed back hard against bubble concerns, pointing to what he called a "blowout quarter" and robust demand signals for Nvidia's Blackwell and Rubin chip architectures. His take: this isn't an AI bubble, it's the real deal.
The Numbers Tell a Complex Story
Nvidia ranks in the 93rd percentile for quality and the 98th percentile for growth, reflecting genuinely strong fundamentals. Yet the stock still slipped 3.15% Thursday to close at $180.64. Friday's pre-market action showed further weakness, with shares down over 2%. Even with the recent turbulence, Nvidia has gained 30.61% year-to-date.
That's the paradox Huang is dealing with. Nvidia is executing brilliantly, growing explosively, and still can't quite satisfy a market that's simultaneously excited about AI's potential and terrified it might be overpaying for the future. When you're big enough that people think you control the economy's fate, even winning feels complicated.