Nvidia's Business Is Booming. Its Stock Is Falling.

Core Insights - Nvidia reported record quarterly revenue and earnings, surpassing Wall Street expectations, yet its stock has declined over 8% since the announcement [1][3] - The stock is currently trading about 17% below its record high from late October, when it became the world's first $5 trillion company [1] - Concerns about an AI bubble have impacted Nvidia's stock performance despite strong earnings [2][3] Financial Performance - Nvidia's quarterly results exceeded estimates, but the stock has faced downward pressure due to market sentiment regarding AI demand [3][7] - The company has been viewed as a key indicator of AI demand over the past three years [3] Market Concerns - Investors are worried about potential overspending on AI infrastructure by tech giants like Microsoft and Oracle, which could lead to excess data center capacity and debt if AI demand does not meet expectations [4] - Reports of Meta Platforms considering using Google's custom AI chips have raised concerns about Nvidia's market dominance [7][9] Competitive Landscape - Major tech companies, including Microsoft, Amazon, Alphabet, and Meta, are developing custom chips to reduce reliance on Nvidia [10] - Citi analysts project that custom chips will account for 45% of the AI accelerator market by 2028, up from an estimated 35% today [11] Investment Strategies - Nvidia has invested in several customers, including OpenAI and CoreWeave, which has drawn parallels to vendor financing during the Dotcom Bubble [5] - The company maintains that it is ahead of the industry, claiming to be the only platform capable of running every AI model [11]