Nvidia Stock Gives Up Gains Overnight After Blowout Q4 As China Concerns Dampen AI Euphoria

After a see-saw move, NVDA stock closed slightly higher in Wednesday’s after-market session but slipped in overnight trading.

• Nvidia reported Q4 sales and profit above market expectations; Q1 sales view also came in notably higher than targets.
• Nvidia’s analyst call lacked Nvidia’s usual “early innings" table pounding message - Gene Muster.
• Investors noted Nvidia’s comment about the Chinese market, where it is yet to generate sales.

Nvidia Corp. shares reversed gains in the after-market session on Wednesday following blowout results and an upbeat forecast from the AI chipmaker, leaving some investors questioning the forward trajectory.

After the financial numbers were released, shares initially climbed more than 3% before retreating during the analyst call. The stock recovered a bit toward the tail end of the session, but was still down in overnight trading.

Although Nvidia’s post-earnings move is consistent with the past trend, investors pondered over the reason for the muted reaction. 

Deepwater Management’s Gene Muster said in an X post that the call lacked Nvidia’s usual “early innings" table pounding message. “Jensen is leading with data over his typical bombardment of bullish adjectives,” he said, adding that the move also underscores investors' concerns over long term growth.

CNBC’s Jim Cramer said he believes management comments about China triggered the slide. “I think that’s a mistake,” he said on X.

Nvidia CFO Colette Kress said the company is yet to generate revenue from China and was engaged with the U.S. and Chinese governments to secure approval for its H200 chips. The company also clarified that data center revenue for the fourth quarter and the first-quarter forecast for the segment do not include sales in China.

Earnings Recap

Nvidia reported January quarter sales and adjusted profit well above estimates (Revenue: $68.13 billion vs $66.21 billion est.; EPS: $1.62 per share vs $1.53 est.). Revenue in the company’s mainstay data center segment surged 75% to $62.3 billion.

Nvidia forecast current quarter sales of $78 billion, plus or minus 2% – also way higher than analysts' average estimate of $72.60 billion.

Retail Discuss Strategy After Muted Move

On Stocktwits, retail sentiment around NVDA shares soared to ‘extremely bullish’ as of late Wednesday, from ‘bearish’ the previous day, amid ‘extremely high’ message volume. Members discussed the muted reaction and whether that offered an attractive entry point or a signal to sell.

A user posted: “I am now confused by the stock. I have watched for the last several quarters blowout earnings and guidance. Yet...the market shrugs it off and the stock remains in a compressed trading range. For the first time, I am considering lightening up my position and allocating the funds elsewhere. Anyone else considering doing the same?”

“The reason it dropped was during the call when asked about China, Jensen said they actually haven't had a single order sent to China for the H200. Somehow they looked at that as a bad thing when in reality it's not… Really dumb. I expect this to be up by morning.”

“Looks like history repeats,” said another user, referring to the historic trend of weak stock performance even after blowout earnings.

NVDA Stock Move

To be sure, Nvidia shares posted gains for four straight days, gaining about 4.6%, before its earnings report. As of the last close, NVDA is up nearly 5% year to date but 6% lower than its record high from Nov. 3.

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