Nvidia posts record results but shares fall amid competition concerns

Nvidia reported record quarterly results with sales and profits exceeding expectations, indicating sustained demand for artificial intelligence infrastructure.

The company plays a central role in AI development by supplying chips to leading AI model creators including OpenAI and Meta.

First-quarter revenue rose 85% year-over-year to $81.6 billion (£60.7 billion), while net income more than tripled to $58.3 billion.

Despite the strong numbers, shares fell 1.6% in after-hours trading as analysts noted that investors have become accustomed to Nvidia’s stellar performance and face growing competition.

Nvidia is the world’s most valuable company with a market capitalization around $5.3 trillion.

The company attributed its sales growth to strong performance in its data center division.

Nvidia forecasts annual spending on AI infrastructure will reach between $3 trillion and $4 trillion by 2030.

“Demand has gone parabolic,” CEO Jensen Huang said on a conference call. “The reason is simple: the era of agentic AI is here.”

However, shares fell in extended trading, which Ruth Foxe-Blader, managing partner at Citrine Venture Partners, attributed to “a law of large numbers.”

“Nvidia represents 8% of the S&P 500. Unless there’s a belief in this continued parabolic growth it’s difficult for investors to get super excited, although Nvidia posted outstanding numbers,” she told the BBC.

“But it’s just investors seeking that hypergrowth, which is indicating an early sell-off.”

Victoria Scholar, head of investment at interactive investor, agreed that despite a strong quarter, “the bar is very high for the artificial intelligence bellwether which has made a habit out of delivering incredibly impressive results.”

“Plus investors ‘bought the rumour, sold the fact’ as shares had already rallied ahead of earnings,” she added.

“There are some concerns among Nvidia investors about the growing threat of competition as the data centre landscape shifts and hyperscalers develop their own chips.”