What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) fell 3.3% in the afternoon session after investors continued to lock in some profits, as its latest earnings report failed to meet the market's highest expectations. The decline extends from the previous session, as investors reacted to a quarterly report that, while strong, showed signs of slowing momentum. Although Nvidia beat overall Q2 earnings and revenue forecasts, a slight miss in data center revenue and a Q3 forecast that was only in line with consensus estimates disappointed those hoping for a larger beat. Markets often punish even slight deceleration in growth for highly valued companies.
Adding to the pressure, a weak forecast from peer chipmaker Marvell Technology soured sentiment across the semiconductor sector.
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What Is The Market Telling Us
Nvidia’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 24 hours ago when the stock dropped 0.4% on the news that its second-quarter earnings report, which, despite beating profit estimates, failed to deliver the blowout results investors have come to expect. The chip designer's revenue of $46.74 billion grew an impressive 55.6% year-over-year but was only in line with Wall Street's expectations.
Similarly, the company's revenue guidance for the next quarter of around $54 billion merely met consensus forecasts. While adjusted earnings per share of $1.05 beat estimates by 4%, other metrics pointed to slowing momentum. This was the third consecutive quarter of decelerating revenue growth, and inventory levels increased, with Days Inventory Outstanding rising to 106 from 59 in the prior quarter. For a stock priced for perfection, a report that was simply good, not great, was enough to disappoint the market.
Nvidia is up 25.7% since the beginning of the year, and at $173.87 per share, it is trading close to its 52-week high of $183.16 from August 2025. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $12,999.
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