Nvidia Earnings Reaction: Failed to Meet a Very High Bar, Pullbacks Should Be a Buying Opportunity

In reaction to the announcement, pricing on the Pepperstone’s Nvidia 24-hour CFDs initially fell 5.9% to $171.88 before stabilizing around $177.50, tracking a tight range through the balance of the post-market session and into the overnight period in Asia.

A review of the daily chart shows strong buying support between $174 and $170, with funds seemingly happy to build long positions on dips into this zone. Naturally, should sellers take the price through $170, it could catch a market that is already heavily long offside, forcing fast-money leveraged players to manage drawdowns and potentially exit losing positions.

The investment community would react differently—they would consider whether the investment case has fundamentally changed. If the business is still performing as expected, a pullback and slightly less demanding valuation may be seen as an opportunity to add to what many analysts consider a “top pick” and an outright core holding in the portfolio.

Reviewing the Numbers and Guidance

There is no doubt that the business remains in rude health, with reported and guided numbers looking incredibly strong.

• Revenue is always the most watched metric. Q2 revenue came in at $46.7b (+6% q/q, +55% y/y), above the sell-side analysts’ consensus, with a 57% contribution coming from Blackwell sales, showing the ramp is firmly in full swing. Nvidia guided Q3 revenue of $54b (±2%), which was above analyst expectations but underwhelmed relative to the sky-high positioning and hopes from buy-side funds (hedge funds, pension funds).
• Gross margins (GMs) troughed at 71% in Q1 but are now on a firm path toward 75%. Q2 GMs came in at 72.7% (up from 71.3% in Q1) with guidance for 73.5% in Q3. Given semiconductor valuations are heavily influenced by margin expansion, this trajectory will clearly please investors.
• Share Buybacks: Nvidia authorized an additional $60b to its buyback program—a modest EPS booster and shareholder-friendly signal.
• Other Metrics: While data centre revenue was slightly shy of consensus, all other key reporting lines beat expectations, highlighting a business that is functioning incredibly well and positioned for further growth.

The fact that the share price moved lower post-earnings reflects that, while Q2 results and Q3 guidance were solid, the bar had been set so high that Nvidia needed to smash expectations outright to attract fresh buy-side demand.

Reviewing the numbers, guidance and CEO Jensen Huang’s conference call, its clear the investment case hasn’t changed, and remains in a strong position for share price appreciation.

Where to From Here?

With a market cap of $4.3 trillion and valuation already reflecting 53% y/y revenue growth in Q3 and 52.1% in Q4, one could argue it will be difficult for buyers to push the share price meaningfully above $184 in the near term.

That said, the investment case remains highly compelling. The AI infrastructure spend from the hyperscaler businesses and build out still have far more to play out, and Nvidia is set to capture a large share of that demand. Sales of H20 chips to China were not included in the projections, and along with other potential drivers, this suggests upside risks to consensus sales and earnings estimates.

Unless we see a material pickup in cross-asset volatility or a broad equity sell-off, pullbacks in Nvidia should remain shallow and well supported. Over time, the fair value of Nvidia sits north of $200.