Nvidia's stock pulled a classic market head-fake Thursday, surging 5% after crushing Q3 earnings expectations with $57 billion in revenue, only to reverse course and close in the red. The whipsaw move highlights ongoing investor anxiety about AI valuations despite the chipmaker's continued dominance in artificial intelligence infrastructure.
Nvidia served up another monster earnings beat Thursday, but the market's reaction tells a more complex story about where AI investment sentiment really stands. The chipmaker's shares initially popped 5% after reporting Q3 revenue of $57.01 billion - a staggering 62% jump year-over-year that crushed Wall Street estimates. But that rally didn't last.
By Thursday's close, Nvidia had surrendered all those gains and turned negative, dragging down the broader AI ecosystem with it. The reversal caught many off guard, especially given how definitively the company beat not just official estimates but even the whisper numbers traders had been circulating.
"There's been a lot of talk about an AI bubble," CEO Jensen Huang told investors during Wednesday's earnings call, according to CNBC's transcript. "From our vantage point, we see something very different." Huang's comments came as he systematically addressed every bear case that's been weighing on AI stocks recently - from scaling law concerns to hyperscaler spending fatigue.
The earnings themselves were undeniably strong. Revenue jumped to $57.01 billion from $35.08 billion in the same quarter last year, while the company issued fourth-quarter guidance that exceeded expectations. But one analyst's take may have captured the market's conflicted mood. Ross Seymore at Deutsche Bank, while acknowledging the positive results, maintained his neutral rating on the stock, noting shares are "fairly valued" at current levels.
That cautious stance reflects broader investor anxiety about AI valuations that's been building for weeks. Recent sessions have seen weakness across the AI trade amid fears about elevated valuations, debt financing concerns, and potential chip depreciation. Even Nvidia's blowout quarter couldn't shake those fundamental worries.
