SANTA CLARA, California, August 29, 2026, 10:01 (EDT). Nvidia (NVDA) stock declined 4.6%, cutting $251 billion from its market capitalization as a revised margin forecast reined in gains following its earnings rally.
- Nvidia dropped 4.57% on Friday, wiping out approximately $251 billion in market capitalization.
- The number of shares traded totaled 195.1 million, exceeding the 65-day average by 37%.
- Quarterly revenue saw a twofold increase, while the gross-margin midpoint for the following quarter is down by 100 basis points.
NVIDIA (NASDAQ: NVDA) shares dropped 4.57% to close at $217.55 on Friday, wiping out around $251 billion from the chipmaker’s market capitalization.
The pullback came after Nvidia surged 8.74% post-earnings on Thursday. Despite this, Nvidia closed the two sessions up 3.76%, increasing its market value by roughly $190 billion.
The mixed response highlights how little room Nvidia has left to exceed expectations. While revenue growth is still exceptional, investors are now scrutinising the sustainability of its profits.
Revenue for the second quarter increased by 106% to $96.22 billion. Data-center revenue totaled $89.0 billion, accounting for 92.5% of overall sales Nvidia results.
| Metric | Q2 FY2027 actual | Q3 FY2027 guide | Investor read-through |
|---|---|---|---|
| Revenue | $96.22 billion | $108 billion, ±2% | Midpoint suggests 12.2% quarter-on-quarter growth |
| GAAP gross margin | 75.0% | 74.0%, ±0.5 point | Midpoint indicates a sequential drop of 100 basis points |
| GAAP operating expense | $8.41 billion | $9.2 billion | Sequential growth estimated at 9.4% |
| China data-center compute | Not separately disclosed | No revenue assumed | Upside possible, subject to policy factors |
The $108 billion revenue midpoint would set a new record for the quarter. However, the 74% margin midpoint is one percentage point lower than the most recent figure.
This is significant given Nvidia’s current valuation of $5.24 trillion. Its stock is priced at 27.5 times its trailing earnings and roughly 13.6 times its annualized revenue for the second quarter.
Trading volume on Friday totaled 195.1 million shares, 36.8% higher than the 65-day average and underscoring strong participation in the reversal market data.
Large technology firms continue to drive demand, with Reuters projecting their AI infrastructure spending to top $730 billion this year, compared with $400 billion previously Reuters.
Chief Executive Jensen Huang stated that AI has entered a pivotal phase. Nvidia returned $26 billion to shareholders and kept $99 billion available for share repurchases.
Wall Street maintains a positive view. In a recent survey of 36 analysts, 98% recommend the stock as a Buy or Strong Buy, supporting a Buy consensus analyst survey.
Risks: The guide does not factor in any compute revenue from China data centers. Increased operating expenses, reduced margins, reliance on a small number of customers, and regulatory limitations may offset accelerated unit expansion.
The earnings surprise did not undermine the AI investment thesis. Friday’s drop instead highlighted a harder question: how long can growth persist as incremental margins narrow?
Related articles: NASDAQ:NVDA
