Nvidia Shares Slip After Earnings, $150B Taiwan Plan

Nvidia shares slipped about 2% to roughly $209.26 in early trading Wednesday after closing lower Tuesday for a third straight session, extending a post-earnings pullback.

The company reported first-quarter revenue growth of 85% year-over-year and topped analyst forecasts for revenue and operating income for a 14th consecutive quarter, according to FactSet. Nvidia also guided for faster expansion in the current quarter.

At an event in Taipei marking the opening of Nvidia’s new Taiwan campus, Chief Executive Jensen Huang announced plans to increase annual spending with Taiwanese suppliers to as much as $150 billion, up from roughly $100 billion currently. No timeline was provided for when the higher spending level would be reached.

The announcement highlights Nvidia’s reliance on Taiwan’s semiconductor ecosystem and its relationship with Taiwan Semiconductor Manufacturing Company, which produces many of Nvidia’s designs.

Nvidia’s market capitalization has risen above $5 trillion following a multi-year rally. The stock trades at a forward price-to-earnings multiple slightly above 22, according to FactSet, below peers such as Intel at about 95 and Advanced Micro Devices near 47.

Wall Street sentiment remains largely positive: the average analyst price target on Nvidia is about $294 and roughly 93% of analysts covering the stock maintain Buy-equivalent ratings. Several firms, including Goldman Sachs, Morgan Stanley, Needham and Baird, raised their price targets after the earnings report.

Geopolitical concerns around Taiwan and the global semiconductor supply chain have increased. Those worries intensified after former President Donald Trump recently suggested a pending $14 billion U.S. arms package for Taiwan could be used as leverage in talks with China.

Trading remained muted after the report, with the stock below recent highs as investors continued to assess Nvidia’s growth outlook.