Nvidia's Announcements: Why Investors Are Greeting Them with a Shrug

Nvidia's recent announcements, including its earnings report and CES 2025 keynote, have led to a mixed investor response. While the company reported strong earnings and unveiled new AI technologies, investors have been more cautious than enthusiastic. This article explores the specific factors that have led investors to respond with a shrug rather than excitement.



Nvidia's earnings report and CES 2025 keynote were filled with promising news. The company reported a 122% year-over-year increase in revenue, driven by strong demand for AI infrastructure. Additionally, Nvidia's data center revenue hit a record $26.3 billion, accounting for 88% of total sales. The company also announced the launch of its RTX Blackwell family of GPUs, which use the company's next-generation AI chip, Blackwell.

Despite these positive developments, investors have been more subdued in their response. Several factors may contribute to this indifference:

1. Gross Margin Concerns: Nvidia expects its gross margins to tick down to the "low 70s" early in the fiscal year due to the production ramp of Blackwell chips. This has raised concerns among investors, as it indicates potential short-term pressure on profitability.
2. Modest Guidance: While Nvidia's sales guidance for the current quarter was above views, it was only modestly so. Investors may have been expecting a more bullish outlook, given the company's strong performance and the growing demand for AI technologies.
3. Blackwell Chip Delays: Rumors about potential delays in the launch of Nvidia's Blackwell chips had contributed to worries leading into the earnings report. Although executives reassured investors that the company still expects to begin earning revenue from Blackwell in this fiscal year, the uncertainty has dampened enthusiasm.
4. AI Hype Cycle Concerns: As AI technologies become more prevalent, investors are starting to question the sustainability of the AI hype cycle and the potential impact on tech giants' bottom lines. This uncertainty has contributed to a more cautious investor response to Nvidia's announcements.



Nvidia's announcements have sparked a range of reactions from analysts and investors. While some analysts, such as William Stein and Ben Reitzes, have maintained their buy ratings on Nvidia stock, others have expressed caution. Morgan Stanley analysts warned that supply constraints could limit the near-term outlook for Nvidia, adding that "we think the bigger upward revisions happen later in the year."

In conclusion, Nvidia's recent announcements have led to a mixed investor response, with investors greeting the news with a shrug rather than enthusiasm. While the company's strong earnings and AI technologies are promising, investors are increasingly focused on potential risks and uncertainties, such as gross margin concerns, modest guidance, Blackwell chip delays, and AI hype cycle concerns. As Nvidia continues to navigate these challenges, investors will be watching closely to see how the company addresses these issues and maintains its rapid growth rate.