Nvidia’s whirlwind week

We are living in a volatile world, so perhaps it should come as no surprise that even a company like Nvidia, fresh off a successful earnings report, should find its stock experiencing dramatic fluctuations this week. Perhaps it reflects the emotions of investors unclear on what’s coming next, or maybe it’s because of a variety of mixed messages coming from the market, but whatever the reason, it was an erratic week for the GPU chip giant.

The roller coaster ride began last week when Nvidia announced Q42025 earnings. It was by most measurements an excellent report with the company reporting $39.3 billion in revenue up 78% YoY. Guidance for Q12026 was also positive with company projecting revenue of $43 billion, above expectations. If you wanted to nitpick, gross margins slipped to 73% from 74.6% the prior quarter, suggesting that there might be some pricing pressure bubbling up.

Seems like overall though, it was the kind of report that would get Wall Street’s attention in a positive way, but that’s not what happened.

• The stock slid 8.5% the day after the report.
• It was back up 1.2% the next day.
• On Monday, it registered a 9% loss.
• On Tuesday, it was back up 1.7%.

You get the idea. It was a wild ride, particularly on Monday when it registered an astonishing one-day value loss of $265 billion. That can happen when your market cap is in multiple trillions.

So what’s driving the turbulence?

It’s hard to pinpoint a specific reason for the stock price volatility from a company that is growing at the rate it is. As we've noted in this space recently, there is a data center building boom fueled by the demand for generative AI, and that requires lots and lots of GPUs. You may recall that Amazon, OpenAI, Microsoft, Alphabet and Meta have committed a combined $420 billion to building data centers this year.

But in spite of that, the continuing on again-off again news about tariffs could be feeding investor anxiety. Whether tariffs will have a material impact on Nvidia is unclear, especially when it comes to its core GPU chip business, but it’s creating an atmosphere of uncertainty and confusion that is making investors uncomfortable. 

It’s also worth noting that in a recent podcast interview, Microsoft CEO Satya Nadella said that instead of building data centers in 2027 and 2028, he’s planning on leasing more as he anticipates an oversupply coming from all this building. That could mean taking advantage of existing capacity, ones that have presumably already purchased GPUs, rather than requiring new ones.

It's unclear whether this is a harbinger of something bigger, but what is clear is that all of these mixed messages and inconsistency is causing investor trepidation, and that could account for what happened this week. Nobody can predict the future, but it’s difficult to imagine a scenario, in the short term at least, where demand for Nvidia GPUs declines in a significant way. In any case, weep not for Nvidia. They have a diversified portfolio of products, and the company market cap remains over $2.7 trillion (as of publication).

-Ron