As expected, Nvidia’s latest earnings were strong, but investors are increasingly questioning whether the chip giant’s towering valuation can continue to withstand pressure from bond markets and elevated yields, says Nigel Green, CEO of global financial advisory deVere Group.
Markets headed into Nvidia’s latest results on Wednesday with expectations once again set exceptionally high after a relentless rally driven by demand for AI and tech infrastructure, and Green says investors were right to expect another blockbuster set of numbers. But he warns that even the strongest earnings growth may struggle to fully offset mounting valuation concerns in the current macro environment.
“We expected great earnings from Nvidia again,” Green says. “Demand linked to AI and tech remains extraordinary and the company continues to dominate the most important growth theme in global markets.
“However, valuations are becoming harder and harder to justify as bond markets continue to exert pressure on expensive growth stocks,” he says. “Higher yields change the equation for investors. Future earnings become less valuable when discounted against rising rates, and that creates increasing scrutiny around companies trading at extremely elevated multiples.”
Nvidia has become the defining stock of the AI and tech boom, with investors pouring capital into companies seen as central to the next phase of computing infrastructure.
But,Green says, markets are now entering a more complicated phase where exceptional operational performance alone may no longer guarantee uninterrupted upside.
Investors are no longer simply rewarding growth at any price,” he says. “There’s growing sensitivity around valuations across the market – particularly in stocks that have already experienced extraordinary gains over a relatively short period.
“Nvidia continues to execute at an elite level, but expectations are now so elevated that even excellent results may not remove broader valuation concerns.”
Green notes that Treasury yields and bond market volatility are becoming increasingly influential in determining sentiment toward high-growth tech companies.
“Bond markets matter enormously here,” he says. “As yields rise, investors have alternatives to equities that did not exist to the same degree during the ultra-low-rate era. That naturally places pressure on highly valued sectors.
“AI and tech remain a transformational long-term story, but the market is becoming more disciplined in how it prices future growth.”
He says the company’s latest earnings report reinforces the structural strength of the AI buildout currently underway across global economies.
“No serious investor doubts the scale of the AI opportunity,” Green says. “The issue now is valuation sensitivity, not the quality of Nvidia’s business. Markets can simultaneously believe in Nvidia’s long-term dominance while also questioning whether current pricing already reflects years of future success.
“Investors expected strong numbers,” Green adds. “But they also expect markets to remain highly sensitive to valuation risks as bond yields continue to influence global asset pricing.”