Nvidia (NVDA) Stock: Why Investors Are Selling Despite Record $57 Billion Revenue

TLDR

• Nvidia stock has dropped 17% from recent highs despite Q3 revenues hitting $57 billion, up 62% year-over-year
• Analysts are cutting price targets and investors are taking profits due to stretched valuations and portfolio rebalancing
• Management expects Q4 revenues of $65 billion, representing approximately 65% year-over-year growth
• Some analysts predict Nvidia could reach a $15 trillion market cap by 2030, more than tripling from current $4.4 trillion
• Competition from AMD and other chipmakers is intensifying, with AMD’s MI450 claiming to surpass Nvidia’s upcoming processors

Nvidia shares have tumbled 17% from recent peaks despite delivering blockbuster financial results that beat analyst expectations. The company reported Q3 2026 revenues of $57 billion, representing a 62% increase from the previous year.

NVIDIA Corporation, NVDA

The stock’s volatility has caught many investors off guard given the company’s stellar performance. Nvidia’s current market cap stands at approximately $4.4 trillion after pulling back from the $5 trillion milestone.

Some analysts are trimming their price targets on the stock, citing concerns about valuation levels. Institutional and retail investors have begun taking profits after the strong run-up, viewing current prices as an opportunity to lock in gains.

Management issued guidance for Q4 revenues of $65 billion, which would represent around 65% growth year-over-year. Despite these projections, some market participants remain cautious about near-term demand patterns.

Valuation Concerns Drive Selling

The company’s price-to-earnings ratio currently sits at 45, which some analysts consider elevated despite the rapid growth rate. For comparison, the S&P 500 trades at an average P/E ratio of 31.

Portfolio rebalancing has contributed to the selling pressure as Nvidia’s weight in many funds grew substantially. Tactical selling into strength has become common among professional money managers.

AI-focused funds have experienced notable flows both in and out as traders reassess positions. Macro factors including interest rate expectations are also influencing trading decisions in big-cap AI stocks.

Long-Term Growth Projections

Some market watchers believe Nvidia could reach a $15 trillion market cap by 2030. This projection is based on the AI chip market growing at a compound annual growth rate of 29% through the end of the decade.

At current growth rates, the company could theoretically hit that milestone much sooner. However, revenue growth rates have already begun slowing from 94% a year ago to the current 62%.

Nvidia controls an estimated 80% of the AI chip market according to Susquehanna estimates. But competition is heating up as rivals ramp up investments to capture market share.

AMD has emerged as the primary competitor, with companies like Microsoft, Meta Platforms, and Oracle already using AMD accelerators. AMD claims its MI450 processor will outperform Nvidia’s upcoming Vera Rubin chips.

The company maintains its position as the dominant AI accelerator provider for now. Competition could impact both growth rates and profit margins going forward.

Investors will likely get clarity on the competitive landscape over the next year. The performance of AMD’s MI450 against Nvidia’s new chips will be closely watched by Wall Street.

Management expects continued strong demand for AI chips across hyperscaler customers. The company’s data center business remains the primary growth driver for revenues.

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