Nvidia shares wobble after strong quarter; China, valuation weigh

Nvidia shares wobbled after the company’s earnings release, trading near $216 after a 2% drop on Friday. The stock did not rally sharply despite strong results as investors focused on China access for H200 chips and the company’s large market valuation.

Nvidia reported first-quarter revenue up 85% year-over-year and has exceeded analyst expectations for both revenue and operating income for 14 consecutive quarters, according to FactSet. The company guided for faster revenue growth in the current quarter.

Chief Executive Jensen Huang outlined the firm’s broader strategy over the weekend, saying the new Vera CPU architecture opens access to an addressable CPU market he estimated at about $200 billion and that the estimate includes China. Nvidia is positioning itself as an AI computing platform spanning GPUs, CPUs, networking, software and full-stack infrastructure.

Uncertainty about H200 sales into China weighed on investor sentiment. The U.S. has issued licenses permitting restricted shipments of H200 chips to China, but Chinese authorities have not approved broad deployment and have been supporting local suppliers. U.S. approvals have been granted for roughly 10 Chinese firms to buy H200, though no deliveries have been reported.

In Taipei, Huang said, “H200 has been licensed to ship to China. It would be terrific to be able to serve that market.” He characterized the Chinese market as “very important” and “very large,” and acknowledged Nvidia has “largely conceded” portions of the market to Huawei as local alternatives gain support.

Valuation questions followed the earnings release. Nvidia’s market capitalization exceeds $5 trillion. After the post-earnings pullback, the stock trades at a forward price-to-earnings ratio slightly above 22, according to FactSet. For comparison, Intel’s forward P/E is about 95 and Advanced Micro Devices’ is near 47. The average Wall Street price target for Nvidia is roughly $294, and about 93% of analysts covering the stock maintain Buy-equivalent ratings. Several firms, including Baird, Goldman Sachs and Morgan Stanley, raised price targets after the results.

Analysts kept bullish ratings, but investors showed restraint in buying shares immediately after the report amid the company’s size, the recent rapid rise in the stock, and ongoing geopolitical and regulatory questions in key markets.