What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) jumped 5.1% in the morning session after the company reported impressive first-quarter 2025 (fiscal 2026) results, which blew past Wall Street's sales, operating income, and earnings expectations. Sales were fueled by the growing adoption of the Blackwell data center platform and rising inference AI workloads as management called out an "exponential" leap in demand from customers such as Microsoft, Google, and OpenAI.
It wasn't a perfect quarter, though. The company's data center revenue missed by a slight amount, and its revenue guidance for the next quarter missed. Management also raised concerns about the heightened competition in China and called out tariff concerns (leading to a $4.5 billion inventory write-down and a $2.5 billion shortfall in anticipated China revenue). Overall, we think this was a decent quarter with some key metrics above expectations.
Wall Street analysts stayed mostly positive after the results. Bank of America analysts captured the prevailing sentiment, noting three key takeaways from the results: 1. China risk has been partially mitigated, with $15 billion in first-half H20 product sales already factored into guidance. 2. Blackwell platform adoption is accelerating. 3. Management expressed confidence in gross margin recovery, expecting it to return to the mid-70% range later this year, a positive indicator of improving demand and execution at scale.
After the initial pop the shares cooled down to $140.67, up 4.3% from previous close.
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What The Market Is Telling Us
Nvidia’s shares are extremely volatile and have had 34 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 16 days ago when the stock gained 6% on the news that the company said it would sell more than 18,000 of its AI chips (GB300 Blackwell chips) to Saudi Arabian company Humain to be used in a 500 megawatt data-center project. The agreement also includes further expansion with "several hundred thousand" additional chips potentially planned for delivery within five years. Separately, reports revealed the Trump administration was considering a large-scale sale of Nvidia's AI-centric chips to G42, a United Arab Emirates-based AI company, and its U.S. partner OpenAI. This deal could involve hundreds of thousands of Nvidia's powerful GPUs. Taken together, the updates hint at significant demand for NVDA's advanced chips, which could help boost sales. Separately, markets experienced a boost after data from the Bureau of Labor Statistics revealed that inflation for the month of April 2025 came in slightly better than expected. The CPI rose 0.2% from the previous month, in line with expectations, while headline inflation rose 2.3% year on year (vs estimates for a 2.4% y/y increase). The data revealed inflation continued to edge closer to the Fed's 2% target. The reaction wasn't anything wild, but the sentiment leaned positive. The Nasdaq led the way, climbing 1.7%, boosting some tech stocks. This added to the gains from the day before, which was sparked by a breakthrough in US-China trade talks as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions, and cooling fears of a prolonged trade war.
Nvidia is up 1.7% since the beginning of the year, and at $140.67 per share, it is trading close to its 52-week high of $149.43 from January 2025. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $15,849.
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