Nvidia Stock Takes a Hit Despite Strong Earnings: Why Analysts Remain Bullish

Nvidia (NASDAQ: NVDA) has been the undisputed leader in the AI semiconductor industry, but its latest earnings report left some investors underwhelmed. While the company exceeded Wall Street expectations, the margin of outperformance was not as dramatic as in previous quarters, leading to an 8.5% dip in its stock price. However, analysts at Bank of America (BofA) remain confident in Nvidia’s future, increasing their price target and reaffirming their bullish stance.

Earnings Breakdown: Nvidia’s Strong but Not Spectacular Performance

Nvidia reported fourth-quarter revenue of $39.3 billion, representing a staggering 78% year-over-year growth. This figure slightly edged out Wall Street’s consensus estimate of $38.3 billion. Furthermore, Nvidia provided first-quarter revenue guidance of approximately $43 billion, exceeding analyst expectations by $1 billion. While these numbers are impressive, investors had grown accustomed to Nvidia surpassing forecasts by an even larger margin.

Despite this, BofA increased its price target on Nvidia stock from $190 to $200, signaling a 53% upside from the previous close. The firm also maintained its ‘Buy’ rating, citing Nvidia’s continued leadership in AI computing, including areas like inference, agentic applications, and robotics.

What’s Behind the Stock Slide?

The AI chipmaker’s earnings report, although strong, was met with skepticism from investors due to several factors:

• Smaller Outperformance Margin: In previous quarters, Nvidia often exceeded Wall Street estimates by margins of $2 billion or more. This time, the beat was a more modest $1 billion, triggering a sense of ‘earnings fatigue’ among some investors.
• AI Market Fatigue and Geopolitical Concerns: Some analysts have noted an overall weariness in AI investment, particularly due to increasing restrictions on Chinese trade. With rising concerns about geopolitical uncertainties, some investors are cautious about Nvidia’s continued dominance.
• Competition from DeepSeek: Chinese AI firm DeepSeek recently introduced a large language model (LLM) that is reportedly competitive with American counterparts at a fraction of the cost. While the long-term impact of this development remains uncertain, it adds an additional layer of complexity to Nvidia’s market outlook.
• Blackwell GPU Costs and Margin Pressure: Nvidia’s highly anticipated Blackwell chip has been a key focus for investors. Although the rollout has been successful, some concerns have emerged regarding its impact on Nvidia’s profit margins.

Blackwell: The Fastest Product Ramp in Nvidia’s History

One of the most significant takeaways from the earnings report was the astonishing demand for Nvidia’s Blackwell GPUs. CEO Jensen Huang and CFO Colette Kress highlighted that Blackwell has become the company’s fastest-selling product, with sales totaling $11 billion—far exceeding initial projections of $4 billion to $7 billion.

Despite concerns over increased production costs, BofA believes that Nvidia’s gross margins will see a modest upward trend and recover in the second half of fiscal year 2026. This indicates that while the short-term outlook may be mixed, the long-term trajectory remains strong.

Why Bank of America Remains Bullish on Nvidia

BofA analysts remain confident that Nvidia will maintain its industry dominance and continue its growth trajectory. Here’s why:

1. Unparalleled AI Market Leadership: Nvidia’s GPUs remain the gold standard for AI applications, and the company continues to push the boundaries of computational performance.
2. Strong Revenue Growth Despite Challenges: Even with potential macroeconomic headwinds and AI market skepticism, Nvidia still delivered a 78% revenue increase year-over-year.
3. High Institutional Confidence: BofA’s increased price target reflects strong confidence in Nvidia’s long-term strategy and ability to sustain market leadership.
4. Blackwell’s Record Sales: The overwhelming success of Blackwell indicates that Nvidia remains at the forefront of AI hardware innovation, setting new benchmarks in GPU performance and adoption.
5. Resilience Against Competitors: While emerging players like DeepSeek present challenges, Nvidia’s robust ecosystem and longstanding customer relationships provide a significant moat.

The Road Ahead: Can Nvidia Maintain Its Momentum?

Despite the stock’s recent slide, Nvidia remains one of the most formidable players in the AI revolution. Investors and analysts will closely watch key factors such as:

• The continued adoption of Blackwell GPUs across major AI companies.
• Regulatory and geopolitical developments, particularly concerning China.
• Competitor advancements in AI and semiconductor technology.
• Nvidia’s ability to manage costs and sustain high margins while scaling production.

With a strong financial foundation, industry-leading technology, and continued market dominance, Nvidia’s short-term stock fluctuations may not reflect its long-term growth potential. While some investors may be disappointed by the latest earnings report, BofA’s endorsement suggests that Nvidia remains a compelling buy for those with a long-term perspective.