Shares of artificial intelligence chipmaker Nvidia (NASDAQ: NVDA) slipped Thursday, following the company’s fiscal fourth-quarter results. Apparently, 73% revenue growth and a near-doubling of its earnings per share weren’t enough to please the Street. Even the company’s guidance was spectacular.
Yet here we are, with shares trading lower.
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The fact that shares of the tech stock aren’t jumping on Thursday, following a report that features staggering growth like this, shows two things. First, it suggests investors may be increasingly worried that we’re nearing the peak of the AI (artificial intelligence) investment cycle. And second, it suggests that investors already see a lot of optimism baked into the stock’s valuation today.
But with the stock pulling back a bit following the report, have both of these concerns now been baked into the now-lower stock price enough to make this a good buy-the-dip opportunity?
Not only did Nvidia’s $68.1 billion in fiscal fourth-quarter revenue blow past its guidance for about $65 billion, but its top-line year-over-year growth rate of 73% was a huge jump from the 62% growth it posted in fiscal Q3.
The quarter’s growth, of course, was driven primarily by data center revenue, which rose 75% year over year to $62.3 billion.
Earnings per share for its fiscal fourth quarter soared 98% year over year to $1.76.
The strong finish to Nvidia’s fiscal year put total revenue for the period at $215.9 billion, up 65% year over year.
AI demand, with the help of a more recent inflection in agentic AI (autonomous artificial intelligence systems able to act independently with minimal human oversight), is driving exponential demand for computing, said Nvidia founder and CEO Jensen Huang in the company’s fiscal fourth-quarter earnings release.
“Enterprise adoption of agents is skyrocketing,” Huang explained. “Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth.”
Equally impressive as its top and bottom-line growth, Nvidia continues to have enough spare cash flow to spend massive sums on share repurchases. During fiscal 2026, the AI chip company spent more than $40 billion repurchasing its shares.
While the report was outstanding, it also included two items that have me in the camp of investors wondering if we are nearing the peak of the AI boom that we find ourselves in today.
First, Nvidia’s sequential growth in its data center segment decelerated. Revenue for the important segment grew 22% sequentially in fiscal Q4 — a slowdown from 25% sequential growth in fiscal Q3. And while Nvidia doesn’t provide guidance for its data center segment specifically, its fiscal first-quarter total revenue guidance of about $78 billion implies about 15% sequential growth — down from 20% in fiscal Q4.
Another reason to be cautious is that the company’s share repurchases have come down significantly. Nvidia spent less than $4 billion repurchasing its stock in fiscal Q4, down from $7.8 billion in the year-ago quarter. Quarterly repurchases at this level would extrapolate to about $15 billion annually — far below the more than $40 billion the company spent repurchasing its stock over the trailing 12 months. Perhaps even management thinks its stock isn’t as good a deal today as it was a year ago?
With all of this said, Nvidia remains a great company with extraordinary momentum. But I personally don’t think a company in a cyclical industry that could be nearing the peak of an unprecedented semiconductor investment cycle is worth a valuation of 38 times earnings.
If the stock falls to levels where even management is tempted to ramp up repurchases, I might consider buying it then. After all, Nvidia is a highly technical business; no one understands the product cycle better than Nvidia itself. So I believe Nvidia’s share repurchases are a decent (but not perfect) indicator of how attractive the stock may be in the context of an unpredictable AI cycle.
Of course, investors considering the stock should watch far more than Nvidia’s share repurchases. Still, it’s an indicator worth considering as part of a broader analysis of the stock.
Overall, I just don’t think there’s a good enough discount built into the stock’s price today for me to consider buying Nvidia on this pullback.
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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Nvidia Stock Slips: Time to Buy on the Dip? was originally published by The Motley Fool