Nvidia Beats Earnings But Fails to Impress Jittery Market

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Nvidia's High-Stakes Earnings: Good Isn't Good Enough

All eyes were on Nvidia this week, with the company's results seen as a referendum on the entire AI boom. The chipmaker was under immense pressure to prove that the massive spending on AI infrastructure is accelerating, not peaking. The results, when they landed, were strong by any normal measure, but the market's reaction suggests we have entered a new, more sceptical phase.

The Results: A Solid Beat but Muted Pop

Nvidia posted fiscal fourth-quarter revenue of $68.13 billion, a 73% jump from the previous year, with net income nearly doubling. Adjusted earnings per share came in at $1.62, also comfortably ahead of expectations.

• Data Centre Dominance: The engine of this growth remains the Data Centre division, which brought in $62.3 billion, a 75% increase. This single division now accounts for more than 91% of total sales, with major clients like Alphabet, Amazon, and Meta driving over half of that revenue.
• Networking Surge: Networking-related revenue, a key component of its data centre offering, surged an incredible 263% year-over-year.
• Strong Forward Look: Crucially, the company guided for first-quarter revenue of around $78 billion. This was significantly higher than the $72.8 billion analysts were expecting, a roughly 7% beat on forward guidance—a rare feat for a company of this size.
• Gaming Miss: One weak spot was the Gaming division, which missed estimates with revenue of $3.73 billion. The company blamed ongoing memory chip shortages, which may not improve this year.

Despite the impressive figures, Nvidia's shares only rose around 1.5-3% in after-hours trading. Having beaten expectations for 12 consecutive quarters, investors have become conditioned to expect blowout numbers. The real target was not the official consensus, but the much higher unofficial 'whisper numbers' circulating among traders.

The Competitive Landscape Heats Up

CEO Jensen Huang stated that demand for computing was "off the charts," but Nvidia's dominance is facing fresh competition as the AI chip market becomes more aggressive. Rivals are making moves and big customers are looking to reduce their reliance on a single supplier.

• AMD's Push: Competitor AMD struck a major deal with Meta to supply its own AI chips.
• In-House Development: Customers like Google are increasingly developing their own custom chips (TPUs) to manage costs and control their technology stack.
• Nvidia's Defence: Nvidia isn't standing still. It has announced its next-generation 'Vera Rubin' system, due in late 2026, which promises huge performance gains. It has also invested heavily in key AI firms like OpenAI and CoreWeave, creating a self-reinforcing loop where its investment capital cycles back into chip purchases.

With revenue growth decelerating from 94% in the prior quarter to 73%, the question of 'peak AI' is starting to be asked more loudly. The modest stock move is a clear warning that for Nvidia and other AI darlings, simply clearing a high bar is no longer enough. The results were, however, strong enough to spark a rally in Asian markets, sending Japan's Nikkei 225 index above 59,000 for the first time.

Broader Market Movers

Away from the Nvidia spotlight, several other companies made significant moves, revealing a market that is punishing weakness and rewarding tangible results.

Tech and Software Diverge

• Apple (AAPL): The tech giant announced it will build its Mac Mini product in Texas. This is significant as the Mini is a popular choice for users running AI software at a relatively lower cost.
• Axon (AXON): The Taser maker saw its stock rise after crushing earnings, driven by its successful pivot to AI. Its new software converts body-cam footage into police reports, demonstrating a practical, profitable use for AI outside the data centre.
• Oracle (ORCL): Shares in the software company got a lift after analysts at Oppenheimer upgraded their rating on the stock.
• Salesforce (CRM): In a sign of trouble for software-as-a-service companies, Salesforce saw its shares fall nearly 4% after its full-year revenue guidance failed to impress investors.
• C3.ai (AI): The enterprise AI firm saw its shares crater after a shocking quarterly report, with revenue down 46% year-over-year. The company is now cutting 26% of its workforce.
• Samsung (SMSN): The electronics giant unveiled its new S26 smartphones, with price rises of $100 for some models attributed to the global memory chip shortage. The phones also feature enhanced AI capabilities via Google's Gemini, which can now operate third-party apps autonomously, setting up a fresh challenge to Apple's Siri.

Winners and Losers Elsewhere

• Diageo (DEO): The spirits giant behind Guinness and Johnnie Walker saw its shares tumble 16% after the new CEO halved the dividend to fund a turnaround. The move follows plunging sales in key markets, signalling significant weakness in consumer spending.
• Lowe's (LOW): The home improvement retailer beat fourth-quarter expectations but gave cautious guidance for the year ahead, citing a lack of tailwinds in the housing market.
• IonQ: Quantum computing firm IonQ surged after becoming the first publicly traded company in its field to surpass $100 million in annual revenue, though it still expects massive losses.
• Lamborghini: The luxury carmaker has paused plans for its first fully electric vehicle, joining others like GM in scaling back EV plans to focus more on hybrids amid shifting demand.
• DoorDash (DASH): The delivery firm acquired reservation platform SevenRooms for $1.2 billion as it fights for market share against rivals like UberEats.
• Whirlpool (WHR): The appliance maker came under fire from activist investor David Tepper of Appaloosa Management, who argued in a harsh letter that the company's management has 'destroyed' shareholder value.

Key Index Levels to Watch

Technical analysis of the S&P 500 suggests the index is at a critical juncture. The 6,900-6,910 range is viewed as a key support area. If prices can hold above this level, a rebound towards 6,980 is possible. However, a decisive drop below 6,910 could trigger a broader sell-off. On the upside, the 6,992-7,000 zone presents significant resistance that may stop any immediate rallies.

US Policy Shifts and Geopolitical Tensions

Beyond individual company news, major policy proposals and simmering geopolitical risks are shaping the investment landscape.

White House Eyes Tech and Retirement

During the State of the Union address, President Trump outlined two significant economic plans:

1. A New Retirement Plan: A proposal to offer a government match of £1,000 annually for workers to save in a retirement account if they do not have an employer-sponsored plan.
2. Data Centre Power Mandate: A plan that would require big tech companies to pay for their own power at large data centres is moving forward. Executives from top firms including Amazon, Meta, and OpenAI are set to meet with the President next week to sign a formal pledge on the matter. This move would place a significant financial burden on the companies fuelling the AI boom.

Immigration and Trade Policy Shifts

New immigration policies under the Trump administration have led to longer visa wait times and higher denial rates. This is reshaping how companies source talent, with over 60% of large visa sponsors relocating workers outside the US to hubs in Canada and the UK. Meanwhile, US and Canadian trade officials are set to meet to discuss modifications to the USMCA trade pact ahead of a July deadline.

Taiwan Chip Reliance in Focus

A growing number of tech executives are worried about the heavy reliance on Taiwan for the world's most advanced chips. With a majority of AI chips produced on the island, any military action from China could cripple the global economy. Reports have emerged that the CIA privately warned Apple CEO Tim Cook that China could be in a position to invade Taiwan by 2027, raising the stakes significantly.

Crypto Market in the Spotlight

Developments in the cryptocurrency space show a market pulling in two directions: towards greater integration with traditional finance on one hand, and towards greater scrutiny of its opaque structure on the other. Bitcoin rebounded strongly to push above $70,000, adding over $170 billion in market value alongside Ethereum and Solana, as concerns over a rumoured daily sell-off pattern faded.

Allegations of Market Manipulation

A major story continues to develop, with lawsuits accusing powerhouse trading firm Jane Street Capital of systemic market manipulation. The firm, a critical player providing the underlying liquidity for the new Bitcoin ETFs, faces allegations of using insider information to profit from the collapse of the Terra/Luna ecosystem in 2022. This raises serious questions about conflicts of interest at the heart of the crypto market's plumbing.

Mainstream and Institutional Adoption Accelerates

Despite the integrity concerns, the push for legitimacy and real-world use is gaining unstoppable momentum, with major players bridging the gap between traditional and digital finance.

• Meta's Big Bet: In a landmark move, Meta announced it will integrate USDC and USDT stablecoins into Facebook, Instagram, and WhatsApp by late 2026. The plan, which targets three billion users, aims to reduce cross-border fees for creators and directly challenges payment ambitions from rivals like X (formerly Twitter) and Telegram.
• 'Neo Finance' Emerges: A new category of 'Neo Finance' is gaining traction, focused on bridging on-chain and off-chain financial systems. Coinbase adding stock trading, Stripe reporting a doubling of stablecoin payment volumes, and Kraken launching regulated perpetual futures on tokenised stocks like Apple and Nvidia are prime examples of this trend. These products extend complex crypto trading tools to traditional equities.
• Regulatory Inroads: The move towards formal regulation continues. Crypto.com has received initial US approval to operate as a bank, while stablecoin issuer Circle has received its own preliminary approval for a national trust bank charter. In a sign of local acceptance, the US state of Indiana is advancing a bill that would allow state retirement plans to offer crypto investment options.

The Emergence of 'Agentic Finance'

A new, more futuristic frontier is opening up with the rise of 'Agentic Finance', where AI agents are given their own crypto wallets to autonomously manage assets and execute transactions. This is creating a functioning financial system for non-human entities. While the legal framework is completely undefined—reminiscent of the creation of the limited liability corporation in the 19th century—the technology is advancing rapidly, with significant institutional interest from firms like Grayscale and Robinhood.

Real Estate Market Cools Despite Lower Rates

Mortgage rates have fallen to their lowest level in years, but it's not igniting the property market as expected. The 30-year mortgage rate dropped to 6.09%, its lowest since 2022, spurring a 4% rise in refinancing activity. However, actual home buying remains sluggish, with purchase applications falling 4.7%. Nearly one in seven home sales (13.7%) fell through in January. This suggests that despite cheaper borrowing costs, economic uncertainty and a power shift towards buyers are making people hesitant to commit to large purchases.

The Energy Sector's Tectonic Shift

The economics of energy are changing rapidly. The cost of battery storage fell an incredible 27% year-over-year to just $78 per megawatt-hour. This is a game-changer, making renewable energy sources far more reliable and cost-effective.

By comparison, the cost of power from natural gas turbines jumped 16% to $102 per megawatt-hour, partly due to surging electricity demand from new data centres. As battery storage becomes cheaper, it will increasingly be able to replace expensive and polluting fossil-fuel plants that are currently used to meet peak electricity demand.

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NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).