‘A company can report outstanding results and still trade at a price that requires perfect performance for many years,’ fund manager Tim Schwarzenberger said.
While many investors took Nvidia’s Nov. 19 announcement of record earnings as validation that the “AI trade” was not simply a bubble waiting to pop but rather grounded in legitimate profitability potential, some insiders continued to sell the company’s shares.
The company reported that it generated $57 billion in revenue in the third quarter, an increase of 62 percent from the third quarter of 2024. The end-of-day announcement, which exceeded many expectations, sparked a brief rally in the company’s shares at the opening on the following morning, but they quickly fell back into the red, falling more than 3 percent in a day and taking market indexes down with them.
Nvidia, the world’s largest company with a market capitalization of around $4.5 trillion, has become a bellwether for valuations of companies tied to artificial intelligence (AI), and although its share price is still up more than 30 percent so far in 2025, there has been significant volatility along the way.
And despite the positive news on earnings, financial analysts say there are reasons to be cautious.
“Nvidia has now beaten expectations for many consecutive quarters, and it has done it again this quarter, but even consistent beats do not settle the valuation debate,” Tim Schwarzenberger, a portfolio manager with Inspire Investing, told The Epoch Times.
“A company can report outstanding results and still trade at a price that requires perfect performance for many years. Earnings describe the present, while valuation reflects the future path that investors are assuming.”
Shares Fall Despite Record Earnings
Since hitting a peak of $207 in late October, Nvidia’s shares have fallen back to current levels of about $180 per share. In step with Nvidia, the tech-based NASDAQ composite index has fallen more than 6 percent from its October peak, and the broader S&P 500 Index, representing the 500 leading publicly traded companies, is down about 4 percent over the same period.
“Nvidia’s earnings make it clear that at least part of the AI story is real—its revenue growth and margins are the kind companies dream about,” Peter Earle, director of economics at the American Institute for Economic Research, told The Epoch Times. “But when one firm reaches multitrillion-dollar status and dominates the entire market, investors are obviously baking in years of uninterrupted AI spending.”
