Nvidia (NVDA) stock slipped about 2% on Thursday, erasing early gains after initially rallying on blockbuster Q3 results and upbeat guidance. The pullback highlights growing investor caution about the sky-high valuations and potential risks associated with the AI market.
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Earnings Blowout Fuels Early Optimism
Nvidia delivered another record quarter, reporting Q3 revenue of $57 billion, up 62% year-over-year, with data center sales hitting $51.2 billion. Earnings per share came in at $1.30, beating Wall Street estimates.
CEO Jensen Huang described demand for AI chips as “off the charts,” pointing to Nvidia’s dominant role in powering generative AI, cloud computing, and large-scale data infrastructure.
The stock initially surged more than 5% in early trading, sparking a rally across other tech names and fueling optimism that the AI boom remains intact.
Why the Rally Faded
Despite Nvidia’s strong fundamentals, several factors dragged the stock lower. After a sharp run-up this year, many traders took the earnings beat as a chance to lock in profits, adding selling pressure.
Even after the CEO’s assurance, investor anxiety about a potential AI bubble, questions over AI monetization, and doubts about the sustainability of the AI boom resurfaced.
Pepperstone Group’s Dilin Wu noted, “Nvidia delivered what the market needed, but the deeper questions haven’t gone away — from whether megacaps can monetize their massive AI capex to how sustainable debt-fueled spending really is.”
Lastly, broader market weakness, fueled by uncertainty about whether the Federal Reserve will cut interest rates and concerns about global growth, also weighed on sentiment.
Is NVDA a Strong Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 38 Buys, one Hold, and one Sell assigned in the past three months. Further, the average NVDA price target of $255.63 per share implies 39.9% upside potential.
