Jensen Huang-led Nvidia is set to report its fiscal first-quarter earnings on May 20, and investors are expecting another quarter of strong growth driven by artificial intelligence (AI) demand. The US chip maker is expected to post revenue and profit numbers above Wall Street estimates as demand for AI chips continues to rise. However, recent market reactions to other AI companies, including Palantir Technologies, are showing that strong results alone may not be enough to satisfy investors with very high expectations, as pointed out by private financial and investing advice company, The Motley Fool.The report highlights Palantir’s strong growth with the company recently reporting an 85% jump in revenue to $1.63 billion. Supported by growth in the US government and commercial business, the company also raised its full-year 2026 sales forecast. Despite this, Palantir shares fell more than 8% in the two days after the earnings report. Analysts say the decline highlighted investor concerns about extremely high valuations in AI-related stocks, adding that Nvidia may also lose billions as a result of stock decline following the earnings report on May 20.
Nvidia faces rising expectations and competition
Nvidia continues to dominate the AI chip market with its GPUs and CUDA software platform, which are widely used by companies building AI systems and data centers. Demand for Nvidia hardware remains strong as technology companies continue investing heavily in AI infrastructure.However, the report highlighted analysts’ concern who recently warned that the company may still face pressure even if it reports strong earnings.According to the report, history shows that companies leading major technology booms often face market corrections when investor expectations become too high. Concerns also remain that businesses deploying AI hardware may take years to fully turn those investments into strong profits.Nvidia is also facing increasing competition from some of its own customers. Large technology companies are developing their own AI chips and hardware for data centers. While these chips may not match Nvidia’s performance, they are often cheaper and easier to access.Analysts said growing internal competition could reduce the GPU shortage that has helped Nvidia maintain strong pricing power and high profit margins.
