By Howard Smith
Publication Date: 2025-12-02 15:38:00
Nvidia reported blowout earnings, but the stock still sank following the report. What gives?
Nvidia (NVDA +0.88%) continues to impress last month with its growing sales and earnings. The artificial intelligence (AI) bellwether blew past expectations yet again, with management predicting an even better current quarter than analysts are forecasting. Yet Nvidia stock is currently trading about 13% below recent highs.
Several factors have led investors to sell shares of the AI leader over the last month. Now that its latest results are in, though, it appears that the stock decline could be a gift for those who want to participate in the growing AI sector.
Here’s why fears of an AI bubble look to be overstated.
Image source: Nvidia.
A critical data point soars
Nvidia reported that overall sales grew 62% year over year. That’s an astounding figure considering the law of large numbers. Fiscal 2026 third-quarter revenue was $57 billion. Most of that — $51.2 billion — came from Nvidia’s data center segment. The rate of revenue growth had, understandably, been gradually slowing in that massive segment. That changed in the third quarter.
Data center sales were not only 66% higher than the year-ago period, but also up 25% sequentially from the second quarter. The chart below clearly shows the reacceleration of that revenue growth.
Data source: Nvidia. Chart by author.
The most recent quarter notably broke a trend of declining sequential growth rates. While there’s no guarantee…