Nvidia Earnings: Is The AI Bubble About To Pop?

Nvidia has become one of the biggest names in the AI race. Valued at more than $4 trillion, the company makes chips that power ChatGPT, Gemini, Amazon and Microsoft, making it one of the fastest-growing and most valuable stocks on the US market.

So, it was unsurprising that investors and tech lovers alike eagerly awaited Nvidia’s earnings, especially after Chinese companies like Cambricon and DeepSeek were able to create AI chips that promised to have the same power as Nvidia’s, just with a cheaper price tag.

And this week, they arrived – but what did they say?

 

What Did Nvidia’s Earnings Show?

 

In the three months to July, Nvidia recorded a 56% increase in revenue year on year. Earnings per share also beat out Wall Street’s predictions, coming in at $1.08, $0.07 above the $1.01 forecast. (Fact Set data)

The real growth behind the company is in its data centre division, which bought in $41.4 billion. However, this slightly missed the predicted $41.3 billion that many Wall Street investors were expecting.

Because of this, despite the stronger than anticipated revenue, the stock still took a slight drop. But was that an overreaction?

 

Why The Stock Fell

 

Having beaten out predictions and announced record-breaking sales, you would think Nvidia would be riding high on a rising stock. But the converse happened.

In fact, shared dropped by around 2.3% according to Reuters, which they have put down to a discrepancy in expectations.

Speaking to CNN, Thomas Monteiro, senior analyst at Investing.com commented “Coming off a new rally to all-time highs, being merely on the mark in terms of revenue simply wouldn’t cut it for Nvidia this time around. Saying the stock was priced for perfection would be an enormous understatement, as it was, in fact, in need of another massive beat.”

What he is essentially saying is that anything short of a perfect earnings report was bound to cause the stock to slightly drop.

This sentiment was echoed by Kate Leaman, chief market analyst at AvaTrade, who commented “Nvidia just posted another monster quarter – revenue and earnings per share exceeded expectations, while the company also announced a jaw-dropping $60 billion share buyback. That’s the kind of signal markets usually love as it says, ‘We’re confident. We’re here to stay’.

“But the stock still dipped after hours – so, what caused this? The mild stock dip wasn’t about failure; rather, it was about expectations. With options traders pricing in a 6% swing, anything short of perfect was going to invite second-guessing. That’s what happens when you’re a $2 trillion AI titan. The bar is just that high. Right now, the market is looking past the headlines. Investors want to know not just how Nvidia performed, but how clearly it can chart the future.”

But it isn’t just earnings that investors are weary of. In general, many have warned of an ‘AI Bubble’ – reminiscent of the dot-com bubble, which caused a tech-hype-driven stock market back in 2000.

 

 

Is The AI Bubble Real?

 

Many in America will remember the impact of the dot-com bubble burst, which was driven by hype around the new internet age. Just like with AI, the birth of the internet felt like a revolution, causing investors to become overly optimistic around stock prices, causing a bubble.

However, when it crashed, some estimate that the downfall saw losses for investors of trillions of dollars.

So, is AI heading in the same direction?

According to an MIT report, published in 2025, 95% of companies using generative AI are yet to see a significant increase in profits. This has caused many investors to be nervous – and rightly so.

In fact, Torsten Sløk, chief economist at Apollo Global Management, has warned that AI stocks are even more over-valued than dot-com stocks were in 1999, meaning that the crash is likely to be even bigger.

 

What Else Might Be Causing Nervousness?

 

Unfortunately for Nvidia, the company is also trying to battle turbulent politics in the US.

Under President Joe Biden, The US banned AI chip exports to China, citing security concerns as the main reason. Security experts were worried that Nvidia’s chips were helping boost China’s AI technology, which could be used against the US. (BBC)

However, this was later relaxed by President Trump under the condition that 15% of all Chinese generated chip revenue was paid back to the US government. A deal that Nvidia openly welcomed – but a sign that US policymakers can change their minds quickly.

For many investors, The US market – which was previously seen as a safe haven – has become somewhat riskier as tariffs, visa and trade laws have all changed under the new administration.

Because of this, investors have become slightly more cautious, though US stocks still seem to be performing well this year.

 

So, Is This An AI Bubble?

 

Truthfully, no one knows. AI is already completely changing the way we work and live, and has already been widely adopted by companies like Microsoft, Google and Amazon.

Because of this, demand for chips is likely to continue – making Nvidia an appealing option for investors and unlikely to simply “crash”.

However, as stock prices go up and expectations rise, a correction seems like it could happen. But a total bubble burst? Less so. Only time will tell.

 

Nvidia’s Earnings

 

Nvidia’s earnings are certainly a sign that the AI economy is booming. Sales are growing, demand is there and yet, the market is still a little wary.

So can Nvidia grow fast enough to keep up with the hype? Or will the AI bubble just deflate a little as the hype dies down?

Ultimately, as long as AI is being used around the world, Nvidia is likely to stay a key player in the space. We will wait and see!