Nvidia's first-quarter earnings report is nearly perfect, except for one thing!

Nvidia’s latest quarterly financial report is a near-perfect answer sheet, but behind its far surpassing expected financial data and robust capital return plan, a split has emerged in the market regarding its narrative for future growth drivers, with some investors beginning to become more cautious.

The AI chip giant’s first-quarter revenue and profits both significantly exceeded Wall Street expectations, and the company provided equally strong guidance for the second quarter. Additionally, Nvidia announced a stock buyback plan of up to $80 billion and sharply raised its dividend, sending a message of strong confidence in its capital allocation and underlying unit economics.

However, beneath the impressive numbers, management’s statements in certain areas are more defensive than before. According to Chasewind Trading Desk, Barclays’ latest report points out that the surprising business unit restructuring, the discussion on the legitimacy of the $20 billion CPU revenue target, and concerns over potential delays of the next-generation Rubin architecture have left the company’s new growth narrative less clear, which has to some extent impacted investors' short-term sentiment.

Although Wall Street investment banks like Goldman Sachs and Morgan Stanley remain highly optimistic about Nvidia’s capital expenditure sustainability and valuation advantage, subtle shifts in market focus indicate that investors have moved from simply chasing performance surprises to more rigorously scrutinizing the execution of its product roadmap and competitive moat.

Both Earnings and Guidance Exceed Expectations

According to the financial report, Nvidia’s first-quarter revenue reached $81.6 billion, far exceeding Wall Street’s expected range of $78.8 billion. Among them, data center business revenue reached $75.2 billion, with a gross margin steady at 75.0%. For the second quarter, the company gave a revenue guidance midpoint of $91.0 billion, also well above the market’s expected range of $86.1 billion.

In terms of capital return, Nvidia announced an additional $80 billion stock buyback plan on top of current authorizations and raised its quarterly dividend from $0.01 per share to $0.25 per share.

Goldman Sachs noted in its report that strong guidance combined with optimized capital allocation provides a clearer path for the stock to outperform the market in the coming months. Morgan Stanley also believes this is a report that cleanly beats expectations and raises guidance across all metrics.

Barclays Highlights Risks: Four Key Doubts in the New Narrative

Despite overall positive terminal market commentary and the company’s re-affirmation of cumulative $1 trillion revenue from Blackwell, Rubin, and network business in calendar years 2025-2027, Barclays clearly stated in its report that some investors may view this financial report with a more cautious attitude.

Barclays pointed out that Nvidia’s growth narrative feels “less clean” and has posed four concerns causing market scrutiny.

First, management proposed achieving at least $20 billion in standalone CPU revenue this year, but Barclays believes this figure is hard to justify through rough estimates, suggesting the actual number should be closer to the tens of billions range.

Second, management’s statements about the LPU market seem more hesitant.

Third, the company unexpectedly restructured its business units, merging previous gaming and professional visualization businesses into the Edge Computing department.

Finally, management referred more often in the financial report to the leading supercomputing service providers’ successes with custom chip (ASIC) projects, with an overall tone that was somewhat defensive.

Wall Street’s Consensus and Divergence: Rubin Architecture as the Focus

Subtle information differences have emerged among Wall Street investment banks regarding the delivery timeline for the next-generation Vera Rubin architecture.

Barclays stated that its Asian supply chain research shows Rubin’s delivery may be delayed until the end of this year, though Nvidia officially insists shipments will start in Q3.

In contrast, Morgan Stanley is more optimistic about Rubin’s progress.

Morgan Stanley pointed out that Vera Rubin is advancing as scheduled and is expected to be delivered in the third quarter, providing strong answers to key competitive questions and proving Nvidia’s hardware leads in AI factory economics. Goldman Sachs also expects the Rubin platform to ramp strongly in the second half and confirm initial revenue in Q3.

Market Impact: Valuation Advantage and Cautious Sentiment Coexist

Despite imperfections in the new narrative’s clarity, Wall Street generally agrees on Nvidia’s valuation appeal.

Morgan Stanley emphasizes that given next year’s P/E ratio of less than 17, Nvidia still stands out among semiconductor peers. Barclays also acknowledges that despite the above concerns, the stock remains inexpensive relative to peers, and Nvidia is still indispensable for AI infrastructure construction.

Overall, Nvidia’s financial fundamentals remain rock solid; its token cost annual reduction exceeds 70%, continuously improving clients’ underlying economics. However, as market expectations rise, investors are becoming more demanding.

In the next few quarters, whether Nvidia can successfully deliver the $20 billion CPU revenue target, and whether the Rubin architecture can be delivered as scheduled, will be key to dispelling the market’s cautious sentiment.

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The above content is from Chasewind Trading Desk.

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