Nvidia's shares fluctuated on Thursday after the company reported a robust quarterly performance, although it did not meet some investors' high expectations.
The AI chip leader forecasted its slowest revenue growth in seven quarters, partly due to supply chain constraints that will cause demand for its chips to exceed supply for several quarters in fiscal 2026.
Analysts attribute the anticipated slowdown to the 'law of large numbers,' indicating that Nvidia's rapid growth makes year-over-year comparisons increasingly challenging following the AI boom initiated by ChatGPT's launch in 2022.
Despite the challenges, demand for Nvidia's next-generation AI chip, Blackwell, remains strong. However, the complex chips require months to manufacture, and a design flaw discovered over the summer has compounded production issues.
CEO Jensen Huang noted that there is a 'limit' to how quickly Nvidia can increase production, which is likely to pressure gross margins. Nevertheless, a portfolio manager holding Nvidia shares emphasized that the demand for its chips is 'absolutely and exceptionally strong' and is expected to continue in the near future.