NVDA Down Almost 10% In 2 Weeks Despite Record Revenue: What Is Going On?

Key Points:

• Nvidia reported a strong first-quarter with $81.6 billion revenue, an 85% year-over-year increase, alongside an $80 billion buyback and a dividend increase from 1 cent to 25 cents, yet its stock is only up about 13% this year, below its May highs near $236.
• Analysts argue that Nvidia’s western data-center growth may be outpacing competitors, who appear reluctant to benchmark their custom chips, suggesting Nvidia’s competitive edge remains strong, especially as its CPU business targets $20 billion in revenue this year.
• Concerns about GPU obsolescence within two years are challenged by some experts, indicating that fears of rapid write-downs may be overstated.
• Rising U.S. bond yields and inflation forecasts have led to equity multiple compression, which could be limiting Nvidia’s stock appreciation despite strong fundamentals, reflecting a broader market repricing rather than company-specific issues.
• Nvidia has beaten earnings expectations in 18 of the last 20 quarters, but future stock performance may depend more on macroeconomic factors like interest rates than on its continued operational success.