Nvidia Shares Drop 1.6% Despite Record £60.7 Billion Quarterly Revenue
Nvidia, a key provider of artificial intelligence (AI) chips to major developers such as OpenAI and Meta, announced a record first quarter. The company’s revenue surged by 85% year-on-year, reaching £60.7 billion. Net income saw an even more substantial increase, tripling to £45.8 billion.
However, the market reacted with scepticism, as Nvidia’s shares fell by 1.6% in extended trading. Analysts suggest that investors, accustomed to Nvidia's consistent delivery of exceptional results, are now factoring in increased competition within the data centre sector. Nvidia, currently the world's most valuable company with a market capitalisation of approximately $5.3 trillion, attributed its robust sales to significant growth in its data centre division.
Chief executive Jensen Huang projected annual spending on AI infrastructure to reach between $3 trillion and $4 trillion by the end of the decade, stating that “demand has gone parabolic” due to the emergence of “agentic AI.”
Ruth Foxe-Blader, managing partner at Citrine Venture Partners, noted the phenomenon as “a law of large numbers,” indicating that with Nvidia representing 8% of the S&P 500, investors require extraordinary sustained growth to maintain enthusiasm. Victoria Scholar, head of investment at interactive investor, added that the high expectations for the AI bellwether, coupled with investors selling off after a pre-earnings rally, contributed to the share decline. Concerns over growing competition from hyperscalers developing their own chips also played a role in the market’s subdued response.
