Nvidia Q4 Earnings Beat Expectations but Stock Plunges 5.5%, $260 Billion in Market Value Erased Overnight, Why Are Investors Voting With Their Feet?

TradingKey - February 25, 2026, the global AI chip leader NVIDIA (NVDA) released its fourth-quarter fiscal 2026 earnings report, with revenue, net income, and data center business all significantly exceeding Wall Street's consensus estimates, delivering a "blockbuster" performance.

However, the day after the earnings release, NVIDIA's stock price plummeted 5.46%, with approximately $260 billion in market value wiped out in a single day, marking its largest single-day drop in nearly three quarters.

With the strongest earnings report in history on one hand and massive capital flight on the other, why did investors "vote with their feet" amid this unusual divergence between performance and stock price? What exactly is happening with NVIDIA? AI computing power Has the boom peaked? Can NVIDIA continue to lead tech stocks higher in 2026?

What hidden concerns lie within NVIDIA's Q4 earnings report?

NVIDIA Q4 achieved total revenue of $68.1 billion, a significant year-over-year increase of 73%, far exceeding the market expectation of $65.684 billion; net income reached $43 billion, up over 80% year-over-year, with annual net income surpassing $120 billion and average daily profit exceeding $330 million. Quarterly revenue from the data center business was $62 billion, up 81% year-over-year, accounting for over 91% of total revenue and becoming NVIDIA's undisputed core growth engine.

Jensen Huang stated clearly during the earnings call: "Agentic AI has reached a tipping point; computing power is revenue. Approximately $300 billion to $400 billion in global capital is shifting toward the AI sector, and demand is far from hitting a ceiling."

However, behind NVIDIA's strong performance lie several hidden concerns. First, the business structure is extremely concentrated, with the data center business accounting for over 91% of revenue, while contributions from gaming, automotive, and professional visualization remain very low. Notably, the automotive business generated $604 million in quarterly revenue, missing analysts' estimates of $654.8 million. The lackluster growth in autonomous driving and smart vehicle businesses fails to hedge against the cyclical volatility risks of AI computing power.

NVIDIA's customer concentration is extremely high, Microsoft (MSFT) , Amazon (AMZN) , Google (GOOGL) , Meta (META) , Oracle (ORCL) The five major cloud providers contribute over 50% of revenue. High customer concentration means that if top-tier customers cut capital expenditures, NVIDIA's performance will come under direct pressure.

As one of the world's largest markets for computing power demand, NVIDIA H200 and other high-end chips have not yet achieved large-scale shipments. Geopolitical factors continue to constrain revenue growth, acting as a hidden shackle on long-term expansion.

Why did investors "vote with their feet" when earnings beat expectations but the stock price tumbled 5.5%?

Despite both earnings and guidance exceeding expectations, NVIDIA's stock price plummeted 5.46%, wiping out $260 billion in market value. This "sell-the-news" trend is not accidental but the result of a concentrated explosion of multiple pessimistic expectations.

Over the past five quarters, NVIDIA has consistently beaten expectations, with the stock price recording a cumulative gain of over 300%. The market has come to view "blockbuster earnings" as the norm. Before the earnings release, NVIDIA options implied single-day volatility was only 5.6%, the lowest in three years, meaning that the market had already priced in the "beat." Without a surprise beyond expectations, it became the biggest negative factor.

Goldman Sachs stated bluntly in a research report, that NVIDIA's 2026 growth potential has been fully priced in, and the market needs a clear growth path for 2027, but the earnings report did not provide incremental information beyond the existing narrative.

While cloud providers like Microsoft, Google, and Meta are expected to exceed $1.1 trillion in AI capital expenditures in 2026, these massive investments have yet to translate into actual profits. The slow commercialization of AI makes the "all investment, no return" model unsustainable.

According to a Bank of America Global Fund Manager Survey, high AI capital expenditures by cloud providers are now viewed as the second largest source of systemic credit risk. Investors worry that demand for computing power is nearing a peak and that NVIDIA's high growth will be difficult to sustain.

NVIDIA's market value once surpassed $4.7 trillion, making it the most valuable company in the world, with institutional investors reaping significant profits. Following the earnings release, investors chose to "lock in profits," and large-scale selling triggered a stampede effect, amplified by automated stop-losses from quantitative funds.

Recently, talk of an "AI bubble bursting" has swept through Wall Street. Some institutions believe there is an overcapacity in global AI computing power infrastructure. Among 15 newly built AI data centers the vacancy rate exceeds 50%, and rental prices for computing power have begun to soften. Capital is fleeing high-valuation AI leaders and rotating into low-valuation sectors.

Does an AI bubble really exist? Can NVIDIA's high valuation be sustained?

Global tech giants are aggressively expanding AI data centers—Meta alone plans to deploy 6 gigawatts of power capacity, with Amazon and Google expanding simultaneously. However, the lag in downstream AI application commercialization has caused the supply of computing power to grow much faster than demand. Some data centers have utilization rates below 30%, resulting in an awkward "capacity without orders" situation.

Global AI startups raised over $1 trillion between 2023 and 2025, but the vast majority lack a profitable business model and rely solely on concept-based financing. Since 2026, more than 200 AI startups worldwide have collapsed as the industry enters a "deflationary" phase, directly reducing the demand for computing power purchases.

NVIDIA's price-to-earnings (PE) ratio stands at 48.55, far exceeding the semiconductor industry average of 20. Many AI-related stocks have valuations exceeding 100 times. With valuations disconnected from performance growth rates, any slowdown in growth will create significant downward pressure on valuations.

If the AI bubble bursts, cloud providers and AI startups will cut non-essential computing expenditures. NVIDIA's GPU shipment growth rate is likely to decline, and its data center business will face a growth ceiling.

AMD (AMD) + Meta encirclement: Is NVIDIA's monopoly position shaking?

For a long time, NVIDIA has dominated the global AI chip With over 80% market share, it holds an absolute monopoly. However, since 2026, the competitive landscape has shifted dramatically, with manufacturers like AMD, Intel, and Google accelerating their breakthroughs. Among them, the deep collaboration between AMD and Meta has made them Nvidia's most formidable competitor.

On February 24, 2026, AMD and Meta reached a five-year AI chip supply agreement valued between $60 billion and $100 billion. Meta plans to deploy 6 gigawatts of AMD computing power for scenarios such as AI inference, social recommendation, and advertising optimization.

In addition, Google TPU chip iterations are accelerating, with exclusive supply to large model companies such as Anthropic to capture the cloud inference market; Amazon's Trainium chips are being deployed on a large scale for both internal use and external sales, squeezing Nvidia's market space; Huawei Ascend and other chips have achieved technical breakthroughs, rapidly replacing competitors in the domestic market and becoming an adversary that Nvidia cannot ignore.

Can Nvidia's stock price hit new highs in 2026?

2026 marks a "critical pivot year" for Nvidia's stock price. The era of unilateral explosive growth has ended, and a volatile upward trend has become the main theme. Whether it can hit new highs depends on factors such as earnings growth, the competitive landscape, and AI commercialization.

First, it is unlikely that Nvidia will replicate the unilateral surge seen from 2023 to 2025. Three factors—overextended expectations, intensifying competition, and the deflating of the bubble—will weigh on valuations, and the stock price will likely exhibit "volatile upward movement and swing trading" characteristics.

If Blackwell chips continue to be in short supply, Rubin platform deployment exceeds expectations, and AI commercialization accelerates, the stock price is expected to break past previous highs, though gains may be limited.

A Citigroup analysis report points out that Nvidia will be driven by the twin engines of sovereign AI and enterprise AI in 2026. The impact of competition is expected to be manageable, with a target price of $300.

Citi stated that in fiscal year 2026, sovereign AI revenue will grow by more than 200% year-over-year to over $30 billion, as Canada, France, Singapore, and the UK continue to increase investment, becoming new growth engines. Beyond hyperscale cloud providers, accelerated AI deployment by SMEs will hedge against the risk of customer concentration.

Goldman Sachs, meanwhile, stated that Nvidia has a clear path to outperformance in the coming months, with cumulative data center revenue for 2026-2027 expected to exceed $500 billion and a target price of $250.

Goldman noted that AI capital expenditures for the eight major cloud service providers are projected to reach $710 billion in 2026, with growth signals for 2027 already emerging. Nvidia's OpenAI strategic partnership materializing and the $10 billion investment from Anthropic locking in long-term orders, the proportion of non-cloud customers is increasing.

What are the other core factors affecting Nvidia's stock price in 2026?

Macroeconomic factors have a significant impact on Nvidia, particularly Federal Reserve interest rate policy. Interest rates are the core anchor for tech stock valuations. If the Fed continues to cut rates in 2026, it will increase the tolerance for Nvidia's high valuation; if rate cuts are delayed, pressure for a valuation correction will mount.

Nvidia GPUs rely entirely on TSMC (TSM) 3nm and 2nm capacity. If TSMC experiences capacity shortages or delivery delays, it will directly impact the realization of earnings performance.

If the Chinese market reopens for high-end AI chip imports, Nvidia's revenue will see an additional increase of over $10 billion, serving as the biggest catalyst for the stock price; conversely, escalating geopolitical tensions will weigh on valuations.

If AI agents, enterprise AI, and industrial AI achieve large-scale profitability, computing demand will experience a second explosion, triggering another rally in Nvidia's stock price; if commercialization continues to lag, concerns over demand peaking will continue to suppress the share price.