Nvidia's record result fails to impress investors

Chip giant Nvidia reported yet another record quarter with sales and profits beating expectations, seemingly suggesting there's no slowdown in sight for the artificial intelligence (AI) boom.

Nvidia is a central player in AI infrastructure, providing chips to leading AI model developers including OpenAI and Meta, meaning its results are closely watched.

The company reported first-quarter revenue was up 85% on the year to $81.6bn (£60.7bn), while net income more than tripled to $58.3bn.

However, shares in the company fell 1.6% in after-hours trading with analysts saying investors have got used to Nvidia delivering stellar results and amid some concerns that the firm will face growing competition.

Nvidia is the world's most valuable company, with a stock market value of around $5.3 trillion.

In its latest results, it said sales were driven by strong growth in its data centre division.

It forecasts spending on AI infrastructure to be between $3tn and $4tn a year by the end of this decade.

"Demand has gone parabolic," chief executive Jensen Huang told analysts on a conference call. "The reason is simple: the era of agentic AI is here."

But its shares fell in extended trading, which Ruth Foxe-Blader, managing partner at US venture capital firm Citrine Venture Partners, put down to "a law of large numbers".

"Nvidia represents 8% of the S&P 500. Unless there's a belief in this continued parabolic growth it's difficult for investors to get super excited, although Nvidia posted outstanding numbers," she told the BBC.

"But it's just investors seeking that hypergrowth, which is indicating an early sell-off."

Victoria Scholar, head of investment at interactive investor, agreed that while it was a strong quarter for the company, "the bar is very high for the artificial intelligence bellwether which has made a habit out of delivering incredibly impressive results.

"Plus investors 'bought the rumour, sold the fact' as shares had already rallied ahead of earnings," she added.

"There are some concerns among Nvidia investors about the growing threat of competition as the data centre landscape shifts and hyperscalers develop their own chips."