Nvidia (NASDAQ:NVDA) and its semiconductor peers gained on Wednesday after Oracle’s (NYSE:ORCL) upbeat quarterly results and strong cloud guidance signaled surging artificial intelligence infrastructure demand that could boost graphics processing unit sales.
Investors were reminded of Nvidia’s breakout performance in May 2023, when the company forecast $11 billion in quarterly revenue, 53% above Wall Street estimates, kicking off multiple quarters of soaring sales and profits. However, the latest results indicate that growth is starting to decelerate.
While sales still beat analyst expectations, it marked Nvidia’s narrowest beat in nine quarters, sending shares down about 6% immediately following the announcement.
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Nvidia faces two major hurdles: scale and supply. As revenue grows, maintaining breakneck gains gets harder, and supply-chain limits, since Taiwan Semiconductor (NYSE:TSM) produces nearly all its chips, add structural pressure, the Wall Street Journal reported on Tuesday.
CEO Jensen Huang admitted supply is “constrained” but said Nvidia is still growing fast. Each AI system needs up to 600,000 parts now and 2.5 million in future models, making production highly complex. It takes about a year from chip start to delivery of an AI supercomputer.
UBS analysts told the WSJ that Nvidia’s “supply” metric rose to $45 billion from $41 billion, signaling steady but not explosive revenue ahead. Annual revenue growth slowed to 56%, the weakest in two years, and forecasts suggest further deceleration.
Huang remains bullish, predicting AI data centers could reach $3–4 trillion by 2030, with Nvidia’s next-gen Rubin chips benefiting from a scaled-up supply chain. However, electricity grid constraints may soon limit AI growth.
Nvidia’s stock has climbed nearly 32% year-to-date, outpacing the Nasdaq Composite’s over 13% gain, but analysts warned its momentum could fade.
Citi analyst Atif Malik cut his price forecast, citing Broadcom’s (NASDAQ:AVGO) $10 billion OpenAI chip deal and Alphabet (NASDAQ:GOOGL) Google’s TPU growth as threats.
Malik predicted Nvidia’s 2026 GPU sales could fall 4% below prior estimates, with reliance on just two clients for 39% of revenue adding risk as Broadcom’s XPU wins more partners like Meta Platforms (NASDAQ:META), OpenAI, and Oracle.
Price Action: NVDA stock is trading higher by 3.65% to $177.00 at last check Wednesday.
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