Nvidia shares whipsaw from post-earnings surge to sharp reversal as AI-bubble, fine-print worries weigh

Nvidia’s latest quarterly report briefly reignited optimism around the AI trade, sending the stock sharply higher in early trading. However, soon after, renewed concerns over valuations, financial fine print and a fading prospect of a December US Fed rate cut triggered a broad reversal in global tech shares, including Nvidia.

Shares of Nvidia, the world’s most valuable company, initially jumped as much as 5 percent after the company posted stronger-than-expected quarterly revenue of $57.01 billion and earnings per share of $1.30, alongside an upbeat forecast of $65 billion for the current quarter. That early surge added more than $130 billion to Nvidia’s market capitalisation in after-hours trading. It reflected bullish investor reaction to continued strength in Nvidia’s data centre business and CEO Jensen Huang’s assurances that demand for Blackwell-generation chips was “off the charts” and that the industry had entered a “virtuous cycle of AI”.

But the enthusiasm proved fleeting. By the close of US markets on Thursday, Nvidia plunged more than 3 percent, dragging the Nasdaq and S&P 500 into steep declines. This erased early-session gains in one of the largest intraday whipsaws in recent months. The Nasdaq swung from a 2 percent rise to a 2.4 percent fall; while the S&P 500 logged a 3.6 percent intraday reversal -- its biggest since the April tariff turmoil.

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Nvidia earnings fine print raises questions

Traders quickly homed in on details that tempered the headline earnings numbers. Nvidia’s accounts receivable jumped to $33.4 billion from $23.1 billion, and inventory rose 32 percent quarter-on-quarter to $19.8 billion, prompting worries that revenue recognition and demand visibility may be less straightforward than headline growth implied.

Analysts also noted that four customers each accounted for over 10 percent of quarterly revenue, heightening concerns about concentration risk at a time when AI-related capital expenditure is being scrutinised more closely.

Some investors pointed to CEO Jensen Huang’s attempts to dismiss bubble concerns during the earnings call, but market participants were unconvinced. “Really good news, not being rewarded is typically a bad sign,” Goldman Sachs desk analysts said after the reversal.

AI bubble fears flare up again

Despite Nvidia’s blockbuster results, fears of an overheating AI trade resurfaced. Several high-profile investors have recently exited Nvidia, including Peter Thiel’s hedge fund and SoftBank CEO Masayoshi Son, adding to anxiety over frothy valuations.

Michael Burry, who has publicly bet against Nvidia, has argued that cloud providers are artificially boosting earnings through extended depreciation cycles for AI hardware, even as chip models refresh annually and risk faster obsolescence.

Economists such as David Rosenberg reiterated that the current AI market implies an eightfold expansion in industry size within five years, a trajectory he described as reflective of a “bubble of epic proportions”. Meanwhile, UBS cautioned that investors “do need to worry about bubble risks,” while some asset managers remain underweight megacap tech even after the earnings beat.

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Fed rate cut expectations collapse

Adding to the downward pressure was a delayed US non-farm payrolls report showing 119,000 new jobs in September -- more than double expectations -- undermining hopes of a December rate cut. Morgan Stanley immediately withdrew its call for a cut next month, triggering broader de-risking across equities, crypto and other rate-sensitive assets.

“The Nvidia sizzle is being extinguished by the lowering probability of a December rate cut,” said Jeff Kilburg of KKM Financial, capturing the sentiment that macro headwinds had overwhelmed the earnings-driven rally.

Global tech selloff accelerates

The reversal quickly spilled into Asian markets. SoftBank stock slumped more than 10 percent in Tokyo, SK Hynix nearly 10 percent in Korea, and TSMC over 4 percent in Taiwan, as Nvidia’s drop compounded concerns over tighter financial conditions and the ongoing AI-bubble debate. Analysts described Nvidia as “one of the first pressure points” when risk appetite fades, given its centrality to the global AI supply chain and its dominant influence over market sentiment.

By the end of the session, what began as a celebration of Nvidia’s continued dominance had morphed into a broad risk-off episode. The stock’s daily swing erased about $392 billion in market value, a dramatic indication that even with strong fundamentals and stellar guidance, the market remains acutely sensitive to valuations and AI-infrastructure spending.

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