Tech investors have had a volatile start to 2026, and artificial intelligence (AI) darling Nvidia (NASDAQ: NVDA) hasn’t been spared. As of this writing, the semiconductor giant’s stock has fallen almost 5% year to date.
With shares taking a breather after an incredible multi-year run, investors might be wondering if this is a rare opportunity to buy the dip.
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Or is the market right to be cautious about a stock?
Looking at the company’s latest results, it’s hard to find much to complain about. The business is undeniably strong.
In its fourth quarter of fiscal 2026 (ended Jan. 25), Nvidia’s revenue was $68.1 billion, up 73% year over year. This top-line surge was fueled by the company’s crucial data center segment, where revenue jumped 75% from a year ago to a record $62.3 billion.
“Computing demand is growing exponentially — the agentic AI inflection point has arrived,” noted CEO Jensen Huang in the company’s earnings release.
The company’s massive revenue growth efficiently trickled down to the bottom line. Nvidia’s fourth-quarter earnings per share skyrocketed 98% year over year to $1.76.
And management is also putting its immense cash generation to work. During fiscal 2026, Nvidia returned $41.1 billion to shareholders through share repurchases and cash dividends. A buyback of this scale highlights management’s confidence and directly benefits shareholders by reducing the overall share count.
Even more, the company isn’t forecasting a slowdown anytime soon. Management guided for first-quarter fiscal 2027 revenue of approximately $78.0 billion, indicating sequential growth will persist. Even more, this guidance represents an acceleration, implying about 77% year-over-year growth, compared to the 73% growth the company reported in fiscal Q4.
The problem, however, lies in what the future might hold as the AI landscape matures.
The risk is not necessarily a sudden collapse in AI spending. It is rising competition and the potential for margin erosion over time as the competitive environment intensifies.
Hyperscalers like Amazon (NASDAQ: AMZN), Alphabet, and Microsoft are spending heavily on Nvidia’s graphics processing units (GPUs) today, but they are also leaning increasingly on their own custom silicon solutions. These massive tech companies are some of Nvidia’s largest customers, but it makes sense for them to find ways to reduce their dependence on Nvidia over time. Alphabet, for example, has spent years deploying its Tensor Processing Units (TPUs), while Amazon continues to tout the cost-efficiency of its Trainium chips for training AI models.
