Nvidia reported a record quarter with first-quarter revenue rising 85% year-on-year to $81.6 billion, driven by strong demand for its AI infrastructure, according to BBC.

Strong Growth Amid Rising Competition

The chip giant, a central player in AI infrastructure, said its results showed no signs of a slowdown in the AI boom. Net income more than tripled to $58.3 billion, with the company forecasting annual AI infrastructure spending to reach $3 trillion to $4 trillion by the end of the decade.

Chief executive Jensen Huang told analysts on a conference call that “demand has gone parabolic,” attributing this to the “era of agentic AI.”

Despite the impressive financial figures, Nvidia’s shares fell 1.6% in after-hours trading. Analysts suggested investors had become accustomed to the company’s stellar results and were now seeking signs of sustained hypergrowth.

Market Doubts and Investor Behavior

Ruth Foxe-Blader, managing partner at US venture capital firm Citrine Venture Partners, said the drop could be explained by “a law of large numbers.” She noted that Nvidia represents 8% of the S&P 500 and that unless investors believe in continued parabolic growth, it’s difficult for them to get super excited, even with impressive results.

“But it’s just investors seeking that hypergrowth, which is indicating an early sell-off,” she told the BBC.

Victoria Scholar, head of investment at interactive investor, agreed that while it was a strong quarter for the company, “the bar is very high for the artificial intelligence bellwether which has made a habit out of delivering incredibly impressive results.

“Plus investors ‘bought the rumour, sold the fact’ as shares had already rallied ahead of earnings,” she added.

Competition and Uncertainty

Investors are also concerned about growing competition in the data centre field. As hyperscalers develop their own chips, there are doubts about whether Nvidia can maintain its dominance.

Nvidia, currently the world’s most valuable company with a stock market value of around $5.3 trillion, said its sales were driven by strong growth in its data centre division. However, the sell-off suggests that investors are not fully convinced by its long-term prospects.