Despite record-smashing earnings, Nvidia stock wavers as fears mount over AI’s uncertain future.

Nvidia has done it again—reporting a staggering $39.3 billion in revenue for its fourth fiscal quarter, crushing analyst expectations. Yet, despite this financial powerhouse performance, the AI giant’s stock is teetering. Investors appear uneasy, fearing that the recent rise of more cost-efficient AI models—like China’s DeepSeek—could threaten Nvidia’s dominance in the generative AI space.

The numbers are undeniable: Nvidia saw a 78% revenue increase and a 71% rise in profit, bringing in a jaw-dropping $22.1 billion in net income for the quarter. Wall Street had expected $38.1 billion in revenue, but Nvidia blew past those projections.

Its datacenter unit, which powers the AI revolution, accounted for $35.6 billion in sales, surpassing expectations of $33.5 billion. The company also provided strong guidance for the upcoming quarter, forecasting around $43 billion in revenue, again ahead of estimates.

CEO Jensen Huang hailed the demand for Nvidia’s Blackwell GPU system as “amazing,” emphasising that the AI revolution is still in full swing.

Yet, despite these stellar results, Nvidia’s stock dropped in after-hours trading. The culprit? A slight decline in gross profit margins, which Chief Financial Officer Colette Kress blamed on increased costs tied to more complex datacenter systems. Investors, already on edge, reacted swiftly.

Nvidia’s earnings came at a critical time for tech stocks, which have been shaken by economic uncertainty and concerns over former President Donald Trump’s policies. Nvidia’s stock had already fallen nearly 10% over the past month, as China’s DeepSeek AI raised fears that more efficient models could weaken demand for Nvidia’s high-end chips.

The entire market is feeling the heat. The Nasdaq suffered back-to-back 1% declines earlier this week, and Nvidia, despite its earnings triumph, is struggling to regain its former momentum.

Wedbush analyst Dan Ives called the report a “massive test” for the market, warning that investor sentiment remains heavily negative. Nvidia has long been the crown jewel of the AI explosion, but could its reign be facing a reckoning?

Despite the volatility, many analysts remain bullish. The average price target for Nvidia stands at $175, suggesting a 38% upside from Tuesday’s share price. Bank of America analysts even argue this earnings call could mark the low point in investor sentiment before a fresh rally begins.

Nvidia remains the undisputed leader in AI chips, with Morgan Stanley estimating it will control 95% of the $158 billion GPU market by 2025. It was the best-performing stock of 2023 and 2024, and CEO Jensen Huang isn’t fazed by recent fears. He recently dismissed the idea of an AI spending slowdown as “the complete opposite of the truth.”

Yet, the stock’s recent stumbles suggest that investors aren’t fully convinced. With the AI landscape evolving rapidly and challengers emerging, Nvidia’s future is more uncertain than ever.