NVIDIA Corporation (NVDA) reported its Q4 Fiscal 2026 earnings, far exceeding Wall Street expectations on February 25, 2026. Yet since then, the stock has been dropping significantly. This week, the stock fell by 6.65%, with a 7.29% decline this month and a 4.99% drop year-to-date.
The stock was trading at $177.19, down 4.16% before the market closed for the weekend, though in the after-hours it rose 0.34% at $177.80.
NVIDIA Drops Over AI Spending Sustainability Concerns
NVIDIA reported a quarterly revenue of a record high $68.1 billion, marking a 20% increase from Q3 and a 73% rise compared to the same period last year. Additionally, the firm reported promising company guidance for about $78 billion in revenue for the current quarter, representing another quarter with 77% year-over-year growth.
Investors will be closely watching the gross margin, a measure of profitability that came under pressure last year due to high production costs for Nvidia’s Blackwell chips. NVIDIA’s market cap is approximately $4.5 trillion, and the firm is absolutely profitable, with gross margins at about 75%. Despite such a positive earnings report, the dip is primarily catalyzed by concerns over the sustainability of AI investments and chip demand, which impacted investor sentiment.
Analysts said that investors remain concerned about the AI spending wave and whether it can sustain growth beyond the next few years, or whether the cycle will eventually plateau and fail to deliver expected returns. Jensen Huang pushed back on such concerns during the earnings call and said that customers are already generating returns from the computing power they’ve purchased, which should support continued investment. He also stated that “Computing demand is growing exponentially”, citing agentic AI as a key driver of a 94% profit surge.
Mixed Market Reactions to Earnings
For now, the stock’s earnings report has triggered split opinions. An X user posted on the platform that the Q4 Fiscal 2026 earnings report of Nvidia has shown promising revenue. Also added that “Nvidia’s products are direct revenue-generating assets for its customers, not just capital expenses.”
Gil Luria of D.A. Davidson said that, as Nvidia has provided more detailed guidance for the year than it usually does, and added that he is optimistic about the company’s trajectory in OpenAI, despite the concerns in the regulatory filing.
Furthermore, Joseph Moore from Morgan Stanley highlighted that the firm’s large-scale customers have increased their capital expenditure forecasts, indicating an ongoing investment in chips. Moore is optimistic about the long-term demand for computing power, which is essential for running the AI models.
Product Roadmap in Focus
However, future events like the CEO Jensen Huang’s Keynote at the Morgan Stanley Technology Conference and Nvidia’s annual GTC conference, scheduled for March, are expected to provide insights into Nvidia’s product roadmap, including its Vera Rubin GPU architecture and the subsequent Feynman architecture.
As Nvidia’s fundamentals are strong despite the stock decline, Wall Street maintains a positive view of the stock, suggesting that current stock movements are reflecting sector rotation rather than demand weakening. Analysts recognize the combination of strong growth momentum and relatively low valuation of NVDA as an indicator of ‘Growth at a Reasonable Price’ (GARP) stock.
