What Happened
Nvidia reported its Q3 fiscal 2025 earnings on November 19, delivering numbers that would typically send the stock soaring: revenue of $57 billion (beating the $54.9 billion estimate), profit of $31.9 billion (up 65% year-over-year), and growth of 62% compared to the same quarter last year.
But instead of celebrating, Wall Street reacted with caution. Nvidia’s stock and broader tech indices declined in the days following the announcement as investors questioned whether AI valuations have become disconnected from reality—even when the underlying business delivers.
The paradox captured attention: if a company can grow revenue 62% annually, beat estimates, and dominate its market, yet still see its stock decline, what does that say about AI stock valuations in late 2025?
Key Details
- Q3 Revenue: $57 billion (vs. $54.9B estimate)
- Q3 Profit: $31.9 billion, up 65% YoY
- Annual Growth: 62% year-over-year
- Earnings Date: November 19, 2025
- Stock Reaction: Declined post-earnings despite beat
- Market Cap: Still among top 5 most valuable companies globally
- Data Center Revenue: Continued to drive growth (estimated ~$50B+ of quarterly revenue)
Why It Matters
For Investors
Nvidia’s earnings reveal a critical tension in the market:
The bull case: If Nvidia can sustain this growth, current valuations are justified. The company has:
- Near-monopoly in AI training chips (estimated 80%+ market share)
- Growing demand for inference chips (running AI models in production)
- Expanding ecosystem with CUDA software lock-in
- New product lines (networking, automotive AI)
The bear case: Even perfect execution might not justify valuations if:
- AI spending slows as companies question ROI
- Competition from AMD, Intel, and custom chips intensifies
- Hyperscalers (Amazon, Google, Microsoft) build more in-house alternatives
- Economic downturn reduces enterprise AI budgets
The post-earnings decline suggests investors are pricing in a scenario where growth slows from the current 60%+ rate, even if it remains strong by normal standards.
For Tech Companies
Nvidia’s results validate that AI infrastructure spending remains robust—for now. This matters for:
- Cloud providers (AWS, Azure, Google Cloud) - Can justify continued AI capital expenditures
- AI startups - Signals that training budgets remain available
- Nvidia customers - Companies like OpenAI, Anthropic, Meta continue aggressive GPU purchases
- Competitors - AMD and Intel face an uphill battle against entrenched market leader
But the bubble concerns create uncertainty. If AI sentiment sours, Nvidia’s customers may slow orders rapidly, creating a cascade effect.
For the Broader Market
Nvidia’s post-earnings decline despite beating estimates triggered broader tech stock weakness. The “Magnificent Seven” (Apple, Microsoft, Alphabet, Amazon, Meta, Tesla, Nvidia) saw declines, and AI-adjacent stocks like AMD and Oracle sold off.
This matters because:
- Tech stocks drive indices - S&P 500 heavily weighted to tech
- AI narrative drives valuations - If AI hype fades, corrections could be significant
- Rotation risk - Money could flow from growth to value stocks
The Backstory
Nvidia’s journey from gaming GPU maker to AI infrastructure kingpin is one of the decade’s great business stories. The company’s chips, originally designed for rendering video game graphics, proved perfect for the parallel processing demands of AI training.
When ChatGPT launched in late 2022 and sparked the AI boom, Nvidia was the only company with chips and software (CUDA) ready to meet exploding demand. The stock went on a historic run:
- November 2022: ~$140 per share
- November 2025: ~$590 per share (split-adjusted)
- Peak: Briefly became world’s most valuable company
But rapid appreciation created valuation concerns. At peak, Nvidia traded at 40x+ earnings—high for a hardware company, even a dominant one. Comparisons to the dot-com bubble became common.
Recent quarters showed growth slowing from triple-digit percentages to “merely” 60-80%. While still exceptional, the deceleration raised questions about whether the easy growth is over.
Expert Reactions
Jensen Huang (CEO, Nvidia) remained optimistic during the earnings call:
“Demand for our data center platforms continues to exceed supply. The race to deploy AI is accelerating across industries, and Nvidia’s full-stack approach positions us to capture this opportunity.”
Analysts expressed mixed views:
Dan Ives (Wedbush Securities) maintained his bullish stance: “This quarter proves AI infrastructure spending is real and sustained. The bubble concerns are overblown—we’re in the early innings of a multi-year AI transformation.”
David Tepper (hedge fund manager Appaloosa Management) voiced caution on CNBC: “At some point, these companies need to show returns on their AI investments. If that doesn’t materialize, we’ll see significant multiple compression across the sector.”
What’s Next
Nvidia’s next catalysts and risks:
Positive catalysts:
- Blackwell GPU launch - Next-generation chips with 2.5x performance improvement shipping in Q4 2025
- Inference market growth - Running AI models (vs. training) is growing faster than expected
- Enterprise adoption - Companies beyond hyperscalers starting to deploy AI at scale
- Sovereign AI - Countries building their own AI infrastructure
Risk factors:
- Competition - AMD’s MI300 series gaining traction, custom chips from Google/Amazon/Microsoft
- China exposure - Export restrictions limit addressable market
- Customer concentration - Top 4 customers (Meta, Microsoft, Google, Amazon) represent 40%+ of revenue
- Valuation - Any growth miss could trigger sharp correction
Timeline:
- Q4 2025: Blackwell ramp begins, critical for FY2026 growth
- Early 2026: Next-gen consumer GPUs (gaming market health indicator)
- Mid 2026: First enterprise inference deployments at scale
Our Take
Nvidia delivered exactly what the market should want: massive revenue, massive profit, sustained growth, and continued market dominance. Yet the stock declined.
This disconnect reveals how overstretched AI valuations have become. When perfection isn’t enough to satisfy investors, it suggests expectations are unrealistic.
But here’s the nuance: bubble concerns don’t mean Nvidia is a bad business or overvalued in absolute terms. If the company can sustain 40-50% growth for three more years, current prices are reasonable. The question is whether AI infrastructure spending can support that.
We’re skeptical of the hardest bear case (AI is all hype, spending collapses). Companies are seeing real productivity gains from AI deployment. But we’re also skeptical of the hardest bull case (current growth rates sustain for 5+ years).
The likely scenario: growth moderates to 30-40% annually, which is still incredible but causes multiple compression. That means flat to slightly down stock prices even as the business grows.
For investors, that’s not a disaster—but it’s not the 300% returns of 2023-2024 either. Nvidia remains the best-positioned AI infrastructure company, but the easy money has been made.
The Bottom Line
Nvidia’s Q3 earnings were exceptional by any normal standard: $57 billion in revenue, 62% growth, and crushing expectations. But in the AI-fueled market of late 2025, exceptional isn’t enough. The stock’s decline despite perfect execution signals that investors are nervous about valuations across the entire AI sector, questioning whether spending can sustain long enough to justify current prices.
This doesn’t mean Nvidia is a bad investment or that AI is a bubble ready to pop. It means the market is transitioning from “buy everything AI-related” to “prove the returns justify the spending.” For the world’s dominant AI chip maker, that’s a higher bar—but one Nvidia is better positioned to clear than anyone.
The next six months will be critical. If Blackwell chips ship successfully, enterprise AI deployments accelerate, and customers keep ordering, bubble fears will fade. If spending slows or competition intensifies, the market’s caution will prove prescient. Either way, Nvidia remains the company to watch as the AI infrastructure story evolves.