After languishing for some time after the company's Q3 earnings, shares of artificial intelligence (AI) juggernaut Nvidia (NVDA 0.20%) briefly shot up to nearly $150 before retreating to their current level south of $140.
One of Nvidia's key partners is doing quite well
Some investors were a bit perplexed by the poor performance of Nvidia's stock after its fiscal 2025 Q3 numbers were released. After all, the report was quite positive, so why did the company's shares slip?
NASDAQ: NVDA
Key Data Points
A lot of anticipation is built into earnings releases, and for a company as successful and high-profile as Nvidia, even success can be read as failure by the market -- at least temporarily. At this point, unless Nvidia completely surprises Wall Street, its stock may struggle in the weeks that follow future releases.
Luckily, this effect weakens over time. It seems the dust has settled and the company's stock is more responsive to good news, which is exactly what Foxconn's recent earnings were.
Foxconn, a longtime partner of Apple, is also a key partner of Nvidia. The company, despite seeing slight declines in revenue from its smartphone division, posted record fourth-quarter sales thanks to growth in its networking and cloud division, where it does much of its business with Nvidia. The company told investors to expect similar year-over-year growth next quarter.
The numbers are a clear indication that demand for Nvidia's products and artificial intelligence (AI) computing on the whole remains strong.
Big spenders plan to spend big
Foxconn's earnings release comes just a week after Microsoft announced that it expects to spend $80 billion on AI data center infrastructure in its FY 2025. This was huge news for investors, as it confirms that Silicon Valley's AI arms race is not winding down any time soon.
Many were concerned that the already ballooning budgets from Microsoft and its competitors would be tightened this year, or that at the very least their growth would be slowed, but the number Microsoft announced represents a roughly 60% increase year over year.
Of all the providers downstream of these infrastructure spends, Nvidia will more than likely be receiving the lion's share of the funds. As the newest iteration of its Superchip is released, its competitive advantage and moat are firmly intact.
Jensen Huang's resenting at CES
Jensen Huang, Nvidia's CEO, gave the keynote speech at CES 2025 on January 6. This is one of the largest and most important trade shows in the industry. All eyes were on the man whose vision has helped shape the AI revolution.
Huang is one of the most important intangibles in Nvidia's competitive arsenal. His leadership has been absolutely critical to the company's success and his presentation at CES helped paint a picture of the next year and beyond. While the company's roll-out of its new Blackwell chips was a central theme, Huang revealed several new products and highlighted the impact that Agentic AI -- a kind of AI more capable than the chatbots popular today -- will have presently.
The question at hand
Is Nvidia a millionaire-maker stock? At this point, it's hard to say yes. It is already one of the largest companies in the world, so extreme growth is unlikely. That being said, there's a whole lot of growth still ahead. There is ample reason to believe Nvidia will continue to outperform the market for some time. Agentic AI really does represent a leap forward in the technology and I think its value in the real world will be made very clear very soon, helping to justify the enormous sums being spent on Nvidia hardware.
