NVIDIA's Stock Will Crater If Revenue Is Up 70% Douglas A. McIntyreAugust 23, 2025 at 11:13 PM It is hard to imagine a company in which the stock will crater if its quarterly revenue is up less than 70% year over year. NVIDIA carries the expectations of that level of growth.
- - NVIDIA's Stock Will Crater If Revenue Is Up 70%
Douglas A. McIntyreAugust 23, 2025 at 11:13 PM
It is hard to imagine a company in which the stock will crater if its quarterly revenue is up less than 70% year over year. NVIDIA carries the expectations of that level of growth.
Key Points -
Earnings Expectations Are High
Bad Numbers Punish Hot Companies
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In the most recently reported quarter, NVIDIA's (NASDAQ: NVDA) revenue rose 69% to $44 billion. It is forecast that the revenue in the upcoming quarter will be $45 billion. The number could be affected by 2% up or down, management said, depending on sales of its H20 chip to China. There has been a tariff and political tug of war that could still affect that number. Management commented, "On April 9, 2025, NVIDIA was informed by the U.S. government that a license is required for exports of its H20 products into the China market."
The primary investor worry is that AI expectations appear to be falling, and that could affect NVIDIA's top line. Meta recently said it would freeze hiring in its AI business. Granted, it has spent billions building talent capacity.
AI stocks were hit hard recently when OpenAI CEO Sam Altman called the AI sector a bumble. He said investors were "overexcited" about AI prospects. NVIDIA's stock dropped from $182 to $174 in two days. Pessimists about the advance of AI have said for a year that large companies like Microsoft (NASDAQ: MSFT) had gotten "out over their skis" after saying they would invest billions of dollars in AI data centers without a clear description of how fast they would get a financial return.
NVIDIA cannot afford even a tiny misstep that would change the market's expectations of its wild success. Its stock is up 1,300% in the last five years compared to 90% for the S&P 500. It is the most valuable public company in the world with a market cap of $4.34 trillion.
If there is a cautionary tale for NVIDIA among America's largest tech companies, it is Apple (NASDAQ: AAPL). Expectations turned to disappointment this year, and the company went from being the world's tech company darling to a business that investors perpetually worry about. Apple was the first company in history to have a market cap of $1 trillion on August 2, 2018. It held the No.1 position off and on for four years. Its stock went from $110 five years ago to $227. However, a drop in April took the stock down to $165. The April collapse was due to highly aggressive expectations about iPhone sales and a new generation of AI software. The debut of the AI product has been delayed until next year.
Finally, there is the issue of analysts' forecasts. The average for NVIDIA is $46 billion, which is above NVIDIA's own estimate. Even the smallest of misses will punish the shares.
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