Nvidia (NASDAQ: NVDA) released an impressive fourth-quarter 2026 earnings report, beating Wall Street’s expectations and showing impressive growth. However, the stock fell after the report, and is down slightly for the year.
Here’s what I think is going on.
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There’s no doubt that Nvidia’s latest quarter was a stellar continuation of its incredible growth story. Although it has been a growth stock for years, the company became part of popular culture with the arrival of artificial intelligence (AI) in 2022, as it became clear that its powerful graphics processing units (GPUs) are the best available chips for running new software. And Nvidia has continued to drive innovation and development in the space.
However, as always in the field of technology, nothing stands still, and competition is emerging. Nvidia’s processors aren’t cheap, and other chip makers are developing alternatives that can handle the data inference and training process, often for much less. Amazonfor example, it has its own Tranium AI accelerators and Graviton CPUs, and the company has 1.4 million Tranium2 chips fully registered. AlphabetsThe brand new Tensor Processing Units are 10 times faster than the previous iteration while being twice as efficient. BroadcomApplication-specific integrated circuits (ASICs) are designed in collaboration with their hyperscaler clients to handle specific AI workloads efficiently, and executives expect their sales to increase over the next few years.
In addition, the market is already worried that Nvidia’s biggest clients are overusing the AI infrastructure, and that the bubble will eventually burst. That can lead to reduced sales and sluggish business.
In general, I often caution investors to look at the short term and focus on long term opportunities. Times when short-term problems send good stocks down can be the best buying opportunities. However, what the market sees as Nvidia’s problem is its long-term opportunity.
Indeed, right now, Nvidia is at the top of the world — or the stock market, at least — reporting excellent performance and generating strong demand. Its sales growth rose to 73% year-over-year in the fourth quarter of fiscal 2026 (ended Jan. 25), and there was no slowdown in the status quo. Nvidia is preparing to start shipping processors based on its new Vera Rubin design, which is even more powerful than its current Blackwell Ultra line, and management foresees accelerating revenue growth during the calendar year.
From my point of view, Nvidia is preparing itself to always dominate and protect its moat. It introduces new products that integrate directly with its ecosystem, sets high barriers to entry for competitors in its most powerful offerings, and positions its assets to work alongside other chips that may offer price advantages. Companies like Amazon offer these types of options to their cloud customers.
I understand the market’s concerns, but I still think Nvidia has a lot of stock price growth to offer long-term investors. However, you may not want it to take up too much of a position in a diversified portfolio.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Alphabet, Amazon, and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a policy of disclosure.
Here’s What I Think Is Going On With Nvidia Stock was originally published by The Motley Fool
