Shares of NVIDIA Corporation slipped Thursday even after the company posted another massive earnings beat, showing how investor expectations around artificial intelligence remain unusually high.
The stock fell 2.34% to $218.23 during morning trading on May 21 after Nvidia released its fiscal first-quarter 2027 results. The decline continued a pattern that has frustrated bullish investors for several quarters: strong earnings, stronger guidance, then a market sell-off.
Wall Street appears to be wrestling with a bigger question. How much future growth has already been priced into the world’s most dominant AI chipmaker?
Still, analysts at Bank of America remain optimistic. Following the earnings report, analyst Vivek Arya raised the firm’s price target on Nvidia shares from $320 to $350 while maintaining a buy rating.
The bank described Nvidia’s latest quarter as a “solid beat-and-raise,” pointing to continued demand for AI infrastructure and the company’s expanding role in enterprise computing.
Nvidia reported record quarterly revenue of $81.6 billion. That marked an 85% increase from the same period last year and a 20% jump from the previous quarter. Gross margins also stayed elevated, with both GAAP and non-GAAP margins near 75%.
Much of the attention during the earnings call focused on Nvidia’s push beyond graphics processors and deeper into the CPU market.
Nvidia Chief Financial Officer Colette Kress highlighted the company’s new Vera CPU platform as a major growth opportunity.
“Vera CPU opens a brand-new $200 billion [total addressable market] for Nvidia, a market we have never addressed before. Every major hyperscale and system maker is partnering with us to get it deployed. We have visibility to nearly $20 billion in total CPU revenue this year, setting us up to become the [world ‘s] leading CPU supplier.”
The company believes CPUs could become its next major revenue engine as cloud providers race to build more advanced AI systems.
At the same time, Nvidia warned demand may continue to outpace supply. Founder and CEO Jensen Huang said manufacturing constraints are likely to remain an issue for its newest products.
“My sense is that we’ll be supply constrained throughout the entire life of Vera Rubin.”
Nvidia also issued aggressive guidance for the second quarter. The company expects revenue of approximately $91 billion, plus or minus 2%, while forecasting gross margins to remain around current levels.
One notable detail in the outlook stood out to analysts: Nvidia excluded any contribution from China data center compute revenue. The omission reflects ongoing U.S. export restrictions on advanced AI chips shipped to Chinese customers.
The company also acknowledged concentration risk in its customer base. In its latest Form 10-Q filing, Nvidia revealed that three direct customers accounted for 21%, 17%, and 16% of total first-quarter revenue. Most of that business came from the Compute & Networking segment.
Bank of America analysts raised their earnings estimates for fiscal years 2027 and 2028, citing stronger long-term demand for AI infrastructure, enterprise servers, and agentic AI systems. The firm now forecasts pro forma earnings per share of $9.09 for fiscal 2027 and $13.27 for fiscal 2028.
Analysts expect Nvidia to provide more updates on AI agents and CPU strategy during Jensen Huang’s keynote presentation at the upcoming Computex 2026 conference on June 1.
Despite the bullish outlook, risks remain.
Bank of America pointed to potential weakness in gaming demand, rising competition from large technology companies, stricter government oversight of Nvidia’s dominance in AI chips, and ongoing uncertainty tied to China export restrictions.
Nvidia’s rapid growth has transformed the company from a gaming hardware brand into the central infrastructure provider powering the global AI race. That success has also created a new problem: expectations may now be almost impossible to exceed.
Huang addressed that pressure during a previous company all-hands meeting after Nvidia’s fiscal third-quarter 2026 results.
“If we delivered a bad quarter, it is evidence there’s an AI bubble. If we delivered a great quarter, we are fueling the AI bubble.”
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