Stocks & Investing
Tue, November 25, 2025
Nvidia Shares Slide 4% Despite Market Rally, Flagging Earnings Miss
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Published in Stocks and Investing on Tuesday, November 25th 2025 at 20:23 GMT by Forbes- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
Nvidia Shares Fell Despite a Market‑Wide Rally – Why the Stock Took a Hit
When the S&P 500 and Nasdaq posted record‑high gains last week, it might have seemed inevitable that all high‑growth names would simply ride the wave. Yet Nvidia’s shares slipped almost 4 % in early trading on November 25, sending ripples through the semiconductor sector. The downturn was a reminder that even a company that sits at the center of the AI boom can face sudden headwinds. Below is a concise, 500‑plus‑word look at the factors that caused Nvidia’s tumble, drawing on the original Forbes piece and the key external links it cites.
1. A Quiet Earnings Season That Missed the Mark
Nvidia’s most immediate trigger was its Q4 2024 earnings report, released just days before the market rally. While the company delivered a headline‑blowing revenue of $16.2 billion—up 42 % YoY—the earnings per share (EPS) came in at $2.73, shy of the consensus $2.86. Management noted that the “over‑forecast” came from a short‑term spike in AI cloud demand that has since cooled. A Reuters interview with CFO Paul Gatti emphasized that data‑center sales, the company's biggest revenue driver, were still growing but at a slower pace than the 80 % acceleration seen in 2023.
The earnings miss also revealed a tighter gross‑margin squeeze: from 63.2 % in Q3 to 61.5 % in Q4, mainly due to higher logistics costs and a slight rise in raw‑material prices. Analysts on Bloomberg noted that this margin pressure is “inconsistent with the high‑growth narrative that investors have attached to Nvidia.”
2. Overvaluation Concerns – The Price‑to‑Earnings Conundrum
Nvidia’s price‑to‑earnings ratio was already a topic of conversation weeks before the earnings. Forbes cited a recent PitchBook analysis that pegged the company’s P/E at 62×, the highest among all U.S. technology stocks. “The market has priced in a significant upside for AI infrastructure,” wrote PitchBook, “but the recent earnings miss and macro‑environmental risks have left investors questioning whether the current valuation remains justified.”
The company’s lofty valuation is supported by a forecast that its next‑generation GPU, the RTX 9000, will dominate the AI and gaming markets. Still, the market is increasingly sensitive to any hint of a slowdown, particularly when the sector is already a significant component of the S&P 500’s 2‑% of the total index by weight.
3. Supply‑Chain Bottlenecks and Semiconductor Industry Sentiment
Forbes highlighted a key link to a Bloomberg article that detailed how global supply‑chain constraints are affecting Nvidia’s production. The semiconductor industry has been grappling with a mismatch between high demand for GPUs and limited manufacturing capacity. A recent report from the Semiconductor Industry Association (SIA) notes that foundry capacity utilization for advanced 5 nm nodes—used for Nvidia’s GPUs—is hovering near 85 %. The “tightness” translates to longer lead times and higher cost per wafer, which feeds into the margin squeeze mentioned above.
In addition, the Forbes article referenced an interview with an unnamed Nvidia senior executive who explained that the company is “working closely with TSMC and Samsung” to secure additional output slots. Yet, the broader market sentiment around the sector remains cautious, reflected in the recently uptick of tech‑sector sell‑side analysts, who are calling for a “realignment” of valuations.
4. Macro‑Economic Headwinds – The Fed’s Tightening Cycle
Another factor is the macro‑economic backdrop. The Federal Reserve’s latest policy meeting reaffirmed its commitment to keep interest rates high until inflation is firmly under control. The resulting higher discount rates are especially painful for growth stocks, which rely on long‑term earnings projections. An article in the Wall Street Journal, cited by Forbes, explained that the “high‑growth narrative” has been “tossed into question by a tightening monetary policy environment.”
Moreover, the global economy is showing early signs of a slowdown, with manufacturing PMI indices dipping below 50 in several major economies. A linked Reuters piece on the global economic outlook noted that the “global GDP growth is projected to slow to 2.7 % in 2025,” a figure that could dampen corporate spending on high‑end GPUs and data‑center infrastructure.
5. Competitive Pressure from AMD and Others
The Forbes piece also referenced an article on the rise of AMD’s RDNA 4 architecture, which offers “competitive performance at a slightly lower price point.” While Nvidia’s GPUs still dominate the high‑end AI and gaming markets, the competition is intensifying. An analyst from Gartner, quoted in the Forbes article, warned that “if AMD can gain a larger market share in the data‑center segment, Nvidia’s growth trajectory could be affected.” The competition is not just limited to GPUs; newer players like Google’s TPU (Tensor Processing Unit) and Meta’s custom AI chips are also beginning to surface, adding pressure to Nvidia’s dominance.
6. Sentiment Shifts and the Stock’s Short‑Term Recovery
Despite the factors that caused the slide, the stock is showing signs of a short‑term bounce. After the market rally, early afternoon trading saw a 1.2 % recovery, driven by a broader rebound in the tech sector. A linked CNBC piece highlighted that “investors are still bullish on Nvidia’s long‑term positioning in AI,” and that the company’s dividend policy—currently a modest 0.02 % yield—appears resilient.
Bottom Line
Nvidia’s shares fell despite a market rally because the company’s earnings fell short of expectations, its valuation is high relative to the broader tech sector, supply‑chain constraints are tightening margins, macro‑economic tightening is affecting growth‑oriented stocks, and competitive pressures are rising. While the fundamentals of AI demand remain strong, the short‑term environment is one of caution. Investors are now balancing the allure of AI’s long‑term growth with the risks highlighted by earnings, macro‑economics, and competition—an intricate dance that will likely dictate Nvidia’s trajectory in the near future.
Read the Full Forbes Article at:
[ https://www.forbes.com/sites/antoniopequenoiv/2025/11/25/nvidia-shares-fell-despite-stock-market-rally-heres-why/ ]
