Epic financial report, but the stock price plummeted! NVIDIA faces the "coldest" applause

When the global chip giant NVIDIA once again reports a “perfect” performance, Wall Street’s reaction is like a meaningful sigh. On February 27, Eastern Time, after NVIDIA disclosed its Q4 FY2026 earnings that far exceeded expectations, the market did not give its usual praise and applause. Instead, it responded with a sharp decline in stock price.

This indifference, combined with Bitcoin’s dramatic fluctuations on the same day, paints a complex picture of current risk asset investors’ mindset: after a prolonged feast, the market’s pricing of “perfection” is becoming more and more demanding than ever.

1. Digital Carnival and Stock Price Decline: The “Not-So-Surprising” Surprise

● Looking solely at the financial data, NVIDIA’s performance is almost impeccable.

○ For Q4 FY2026, total revenue reached $68.1 billion, up 73% year-over-year, far surpassing the market expectation of $66.2 billion;

○ Data center business, as the main growth engine, contributed $62.3 billion, also beating analyst forecasts.

○ Even more astonishing, NVIDIA’s guidance for next quarter’s revenue is around $78 billion, not only higher than Wall Street’s average expectation of $72.8 billion but also touching the upper limit of some aggressive bulls.

● However, the capital market’s response was unusually cold. After the earnings release, in after-hours trading, NVIDIA’s stock briefly surged nearly 4%, then rapidly plummeted, eventually turning down. In subsequent trading days, the decline persisted, with the stock falling over 5%, wiping out about $259.2 billion in market value (approximately 1.77 trillion RMB), marking the largest single-day drop in nearly a year.

● Goldman Sachs commented that this “good news is exhausted” scenario reflects a typical “sell the facts” pattern and profit-taking mentality. For a company that has beaten expectations for fourteen consecutive quarters, simply “beating forecasts” has become as natural as breathing and no longer acts as a catalyst for stock price increases. Investors now want to see not just how good it is, but “how good it can get” and “how long it can last.”

2. Hidden Reefs Behind Prosperity: What Is the Market Really Worried About?

The surface-level impressive data cannot hide the deep-seated questions about sustainability. These doubts mainly focus on two aspects:

1. Structural fragility due to over-reliance on a single engine.

● Although data center business is booming, accounting for over 91% of total revenue, other segments of NVIDIA show signs of fatigue.

● Gaming revenue is $3.73 billion, well below the expected $4.01 billion; automotive-related business also underperformed. This structural divergence heightens market sensitivity—if the AI “cash cow” reduces spending, NVIDIA could face an unprotected situation.

2. Customer concentration and concerns over “internal circulation.”

● During the earnings call, Jensen Huang mentioned that the five major cloud service providers and ultra-large-scale clients contributed slightly over 50% of the company’s data center revenue.

● Such a highly concentrated customer structure has raised concerns about demand quality. When giants like Microsoft, Google, and Meta are both NVIDIA’s largest buyers and direct competitors in AI, whether their large-scale capital expenditures can translate into end-user revenue has become a huge concern for investors.

● Goldman Sachs also pointed out that worries about the sustainability of AI capital expenditure by ultra-large cloud providers are intensifying. It is expected that AI spending growth will slow to 62% in 2026, down from 73% in 2025.

3. Supply Bottlenecks and Customer “Rebellion”: Growth Stories Face Challenges

If demand-side concerns are long-term, supply-side constraints are immediate worries.

● NVIDIA CFO Colette Kress admitted that although the company has secured key supplies through long-term agreements until 2027, global memory chip shortages are driving up costs and affecting device shipments. In particular, supply constraints in the gaming sector will be a short-term obstacle.

● Even more pressure may come from major clients’ shifting loyalties. Around the earnings release, Meta Platforms announced plans to deploy “millions” of NVIDIA processors over the next few years and also finalized a five-year strategic partnership with AMD.

● Meta will deploy AMD processors worth hundreds of billions of dollars in data centers and even plans to buy up to 10% of AMD shares. Meanwhile, Anthropic announced it will deploy up to 1 million Google-designed TPU chips.

● This “dual-track” or even “self-developed alternative” strategy is eroding the moat NVIDIA has built over the years. While NVIDIA’s dominance is unlikely to be challenged in the short term, clients’ efforts to reduce dependence on a single supplier and improve bargaining power send a clear signal: the AI arms race is intense, but no one wants to be forever “locked out” by a single player.

4. Bitcoin’s “Empathy”: A Barometer of Risk Appetite

Interestingly, NVIDIA’s stock movement has resonated subtly with Bitcoin’s at this time.

● Before the earnings release, driven by a risk asset rally, Bitcoin surged significantly, returning above $68,000 and approaching $70,000 on February 25. Data from CoinGlass shows that large-scale short liquidations and about $257.7 million in spot Bitcoin ETF fund inflows boosted market confidence.

● However, after NVIDIA’s stock turned downward post-earnings, Bitcoin also entered a volatile phase. On February 27, Bitcoin followed tech stocks downward, dropping over 2% to $67,507, with over 130,000 traders liquidated. Kaiko analysts commented that the crypto market still follows tech sentiment, and such rebounds often lack sufficient support, making a pullback unsurprising.

● Matt Hougan, CIO of Bitwise Asset Management, summed it up sharply: “The end of the crypto winter is not ending with excitement but with indifference.” This phrase also applies to NVIDIA’s current situation. When the market shows “indifference” toward the hottest assets, it indicates that risk appetite is at a very delicate balance—neither willing to miss the feast nor to fully embrace the frenzy.

5. Conclusion: When “Faith” Meets “Valuation”

● After years of AI hype, the market is struggling to move from the “storytelling” phase to the “performance-focused” phase. Huang emphasized that customers are making money with increased computing power, and investments will stay high; CFO promised shipment plans extending to 2027. While these optimistic narratives are appealing, investors need more concrete evidence, more certain cash flows, and more diversified risks given the over $2 trillion market cap.

● For Bitcoin, its synchronized response with NVIDIA reveals a harsh reality: under macro liquidity tightening and slowing growth expectations, even the most rebellious digital assets cannot completely escape the “co-movement” with traditional risk assets.

● Whether as the king of AI chips or digital gold, once investors’ “inherent high expectations” are raised to new heights, any slight movement can trigger a dramatic revaluation. Currently, the market only seeks a stronger guarantee—something that can cut through the fog and shed light on the “future.”