Nvidia shares fell on Wall Street despite the Artificial Intelligence (AI) giant beating expectations after doubling its sales.
Nvidia has announced record revenues of $30bn (£24.7bn) in the three-month period.
The company has been one of the biggest beneficiaries of the AI boom, with its stock market value rising to more than $3 trillion.
But while analysts are accustomed to Nvidia producing “spectacular” sales growth, the latest results show that “the rate of growth is starting to slow down,” said Simon French, head of research at Panmure Liberum.
Analysts had predicted sales growth of $28.7bn in the three months to 28 July.
Nvidia surpassed this with revenue up 122% compared to the same period last year.
But Nvidia’s share price fell 6% in after-hours trading in New York.
“It’s less about beating the ratings now,” said Matt Britzman, senior statistics analyst at Hargreaves Lansdown. “Markets expect it to collapse and it’s the bit rate today that looks disappointing to touch.”
Announcing the latest results, Nvidia CEO Jensen Huang said: “Generative AI will revolutionize the entire industry.”
But Mr French told the BBC: “If you’re going to raise expectations that high you have to keep growing at incredible rates.”
He added that while its current AI chip – called Hopper – is selling well, the next generation Blackwell chip “has faced production delays and that is probably one of the reasons why Wall Street after hours sold off the stock”.
Nvidia’s results have become a quarterly event that sends Wall Street into a frenzy of buying and selling shares.
A “viewing party” was planned in Manhattan, according to the Wall Street Journal, and Mr. Huang, famous for his leather jacket, called “Taylor Swift of technology”.
Alvin Nguyen, senior analyst at Forrester, told the BBC that Nvidia and Mr Huang had become “the face of AI”.
This has helped the company so far, but it could also hurt its valuation if AI fails to deliver after firms have invested billions of dollars in the technology, Mr Nguyen said.
“A thousand use cases for AI are not enough. You need a million.”
Mr Nguyen also said Nvidia’s first-mover advantage means it has the best products on the market, its customers have spent decades using it and it has a “software ecosystem”.
He said competitors, such as Intel, could “catch out” of Nvidia’s market if they made a better product, although he said this would take time.
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