Nvidia Just Slid 5% Post-Earnings. Again. CEO Jensen Huang Insists "This Time Is Different." Is the Stock Still a Buy?

"This time is different," explained Nvidia (NASDAQ: NVDA) CEO Jensen Huang in a recent interview, in response to concerns about a pending artificial intelligence (AI) downturn.

And after Huang announced blowout quarterly numbers on Wednesday, it looked for a hot second as if things really were different. On Thursday, it seemed as if investors were finally rewarding the tech giant for its incredible outperformance, rather than sending shares lower, which is what happened after each of Nvidia's last four consecutive blowout earnings reports.

Unfortunately, it didn't last. By the end of the day on Friday, Nvidia's shares had fallen 5.5%. That leaves them barely above their pre-earnings close.

Why can't Nvidia seem to catch a break from the market? And is Huang right that things are about to change in a big way for Nvidia, and for AI in general? Here's what investors need to know.

Image source: Nvidia Corporation.

Nvidia's incredible quarter

Nvidia really couldn't have done much better in its second quarter. Revenue more than doubled from the prior year to $96.2 billion, beating expectations. Adjusted earnings per share jumped 120% year over year to $2.22, also well above the anticipated $2.09.

Adjusted net income came in at $54 billion. That's a year-over-year increase of $29.2 billion, which -- as my colleague Jeremy Bowman pointed out on Wednesday -- is roughly equal to Apple's entire Q2 net income. In other words, Nvidia added an Apple's worth of profitability to its results in one year.

But the biggest news, which seemed to have pushed the stock higher after the report was released, was the company's projection of 70% revenue growth in 2027, smashing analysts' forecast of 44%. Nvidia's shares opened 6% higher on Thursday, and surged to an intraday high of $230.39 -- a 9.9% gain.

The fact that Nvidia's stock has already given up almost all of its post-earnings gains shows how skeptical investors are of continued AI investment. So, why does Jensen Huang think this time is different for Nvidia?

Is it really all that "different"?

One of the most dangerous phrases in investing is "this time is different." Research shows that investors often overestimate the impact of a potentially disruptive technology on an industry and underestimate how long it will take for new technologies to deliver significant returns on investment.

But Huang thinks we are now hitting an inflection point in AI technology that will change how computing functions, causing a major upheaval in the demand cycle.

"This time is different because this is not demand-driven. This time is different because it's not seasonal," he explained. "This is industrially driven, meaning the fundamental technology of computers is changing."

Image source: Getty Images.

Huang believes that while computer infrastructure upgrades have previously been cyclical -- largely consisting of swapping out aging hardware for newer models of the same type -- AI represents a fundamental shift in how computers function. It will require systemwide upgrades and exponentially more infrastructure to handle the massive computer workloads AI requires.

If he's correct -- and Nvidia's results have borne out his thesis so far -- Nvidia looks incredibly undervalued at its current price, and investors may kick themselves for selling the stock after the last five earnings reports instead of buying more.

John Bromels has positions in Apple and Nvidia. The Motley Fool has positions in and recommends Apple and Nvidia. The Motley Fool has a disclosure policy.