Martin Gamble on US Markets: Why Nvidia’s latest results spooked investors

US stock markets were relatively flat on the week despite a negative market reaction to results from chip giant Nvidia on 25 February.

After initially rallying in after-hours trading Nvidia shares sank as much as 5.5% when markets reopened on 26 February as investors questioned the sustainability of the AI boom and lofty valuations of technology stocks.

One bright spot was the smaller-companies space with the Russell 2000 index doing well. 

US government bonds were a beneficiary of market weakness with the yield on 10-year Treasuries falling under 4% for the first time since October 2025, while 30-year mortgage rates dipped below the psychological 6% level.

Netflix shares jumped after the streaming giant pulled out of its bid to buy Warner Bros Discovery, saying the price required to match an offer from rival Paramount Skydance was not financially viable.

Chipmaker AMD jumped more than 9% on 24 February after announcing a multi-year deal with Meta Platforms to deploy six gigawatts of AMD GPUs (graphics processing unts) for AI data centres.  

Mirroring recent AI-related deals, the Meta agreement included an option for the Facebook owner to purchase up to 10% of AMD based on certain milestones being achieved.

Taser-maker Axon Enterprise jumped more than 26% as earnings beat expectations on strong demand for the company’s devices and software.

Nvidia

Nvidia CEO Jensen Huang must be thinking about what else he can do to impress investors after Nvidia shares fell 5% despite another stellar earnings beat and raised guidance on 25 February.

Revenues for the three months to January climbed 73% to $68.13 billion, easily surpassing analysts’ estimates of $66.21 billion, while adjusted EPS (earnings per share) came in at $1.62 compared with $1.53 expected.

Nvidia’s first quarter revenue guidance of $78 billion at the middle point of the forecast range was higher than the consensus of $72.6 billion, which equates to the fourth straight quarter of accelerating growth.

Continued positivity is clearly starting to wear thin with investors as the debate moves to the sustainability of the AI boom.  

“What is weighing heavy on investors’ minds is how Nvidia can maintain its phenomenal growth rate now its core customers — the hyperscalers — are mostly depleting their cash flows, spending on AI-related capex,” explained Dan Hanbury, global strategic equity co-portfolio manager at NinetyOne.

Nvidia shares are still up around 50% over the past year, comfortably ahead of the 20% gain in the technology-heavy Nasdaq 100 index.

Salesforce

There was some trepidation heading into Salesforce’s fourth quarter earnings because the customer relationship management software giant was a heavy casualty in the Anthropic-inspired sell-off in early February.

Fears focused on the threat that its core business of selling software subscriptions to enterprises would be displaced by AI chatbots. Salesforce instead made the case that AI is more of an opportunity.

Chief executive Marc Benioff commented: “We’ve rebuilt Salesforce to become the operating system for the Agentic Enterprise, bringing humans and agents together on one trusted platform.

“Agentic AI is a tailwind for our business, and we’re well on our way to $63 billion in revenue in FY30 (2030 financial year),” added Benioff.

The company revealed a record fourth quarter with revenues up 12% to $11.2 billion and adjusted earnings per share of $3.81, which topped analysts’ estimates.

Salesforce guided for first quarter revenue in the range of $11.10 billion to $11.08 billion and earnings per share of $3.11 to $3.13, topping analysts’ forecasts of $3 per share.

Reflecting confidence in the business, Salesforce announced a $50 billion share buyback and increased the quarterly dividend. The shares rose 3% to $197, clawing some of the 25% fall in the shares year-to-date.

Home Depot

The world’s largest home improvement chain topped analysts’ earnings estimates for its fourth quarter and reiterated its full year outlook on 24 February.

The shares closed 2% higher, taking year-to-date gains to 9% compared with a 1% advance in the benchmark S&P 500 index.

Resilient demand from professional contractors and lower-cost home repairs helped deliver a 0.4% increase in same-store sales, beating consensus estimates calling for flat sales.  

Earnings per share also came in at $2.72 compared with estimates of $2.54. The business benefited from selective price hikes to offset tariffs with half of Home Depot’s goods sourced outside the US.

The company guided for 2026 same-store sales growth in a range of flat to 2% and adjusted EPS growth of flat to 4%.