Shares in Nvidia fell despite the artificial intelligence (AI) chip maker comfortably beating expectations after doubling its sales.
Nvidia reported record revenue 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 soaring to more than $3 trillion.
But while analysts are accustomed to seeing Nvidia generate “spectacular” sales growth, the latest results show “the rate of growth has started to slow,” said Simon French, head of research at Panmure Liberum.
Analysts had forecast sales growth of $28.7bn for the three months to 28 July.
Nvidia topped this with a 122% year-over-year revenue increase.
But Nvidia’s share price fell 6% in after-hours trading in New York.
“There’s little to beat valuations now,” said Matt Pritzman, senior equity analyst at Hargreaves Launceston. “Markets expect them to break down, and it’s the size of today’s pulse that seems a touch deceiving.”
Announcing the latest results, Nvidia Chief Executive Jensen Huang said: “Emergent AI will revolutionize every industry.”
But Mr French told the BBC: “If you’re going to raise expectations, you have to keep growing at spectacular rates.”
While its current AI chip — called Hopper — is selling well, the next-generation Blackwell chip “has faced some production delays and that’s probably one of the reasons why Wall Street sold off the stock after hours,” he said.
Nvidia’s results have become a quarterly event that sends Wall Street into a frenzy of buying and selling the stock.
According to the Wall Street Journal, a “watch party” was planned in Manhattan, while Mr. Huang, famous for his signature leather jacket, was called. “The Taylor Swift of Technology”.
Alvin Nguyen, a senior analyst at Forrester, told the BBC that both Nvidia and Mr Huang had become “the face of AI”.
That has helped the company so far, but could also hurt its valuation if AI fails to deliver after companies have invested billions of dollars in the technology, Mr Nguyen said.
“A thousand use cases aren’t enough for AI. You need a million.”
Mr Nguyen also said Nvidia’s first-mover advantage means it has market-leading products with a “software ecosystem” its customers have used for decades.
He said competitors like Intel could “chipping” Nvidia’s market share if they developed a better product, though he said that would take time.
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