NVDA beat Q1 and AI capex is intact, yet the stock slid. The market is not yet fully risk-on.
Nvidia (NVDA) reports beat Q1 and AI capex remains strong. But the stock still slipped. This is no longer just about whether AI demand is still there. It is about whether the results are strong enough to justify expectations that were already very high.
Wall Street closed lower on Thursday (May 21). All three major indexes declined, while the Russell 2000 briefly jumped 2.56% on an Iran-US headline that was later flagged as false. The 10-year Treasury yield rose to 4.62%, putting pressure on growth stocks and mega-cap tech.
Tonight’s main focus remains Nvidia. Q1 FY2027 revenue reached $81.6 billion, up 85% YoY. Data Center revenue came in at $75.2 billion, up 92% YoY. Nvidia also raised its dividend 25-fold and announced a fresh $80 billion buyback.
Fundamentally, AI capex remains strong. But the market reaction shows one important point: expectations were already expensive. When a stock falls despite strong results, the market is usually reassessing valuation, not fundamentals.
Tonight's Watchlist 📈
| Stock | Movement | What to Watch | Action |
|---|---|---|---|
| NVDA | Slid post-print | Beat Q1 + Q2 guide $91B (ex-China). Avoid chasing a gap-up. | Hold |
| ASML | Mixed | AI capex proxy; NVDA Data Center +92% gives a tailwind to the semicap chain. | Watch |
| AVGO | Watch | Custom silicon and AI accelerator play; positive read-through from NVDA Networking +199% YoY. | Add |
| TSM | Watch | Foundry for NVDA. Q2 guide of $91B confirms demand pull is still strong. | Add |
| WMT | Drop post-print | Top-line beat but fuel cost squeezed margin. Wait for confirmation before adding. | Trim |
| XOM | Hold | WTI holds near $99/bbl, Iran risk premium remains a live catalyst. | Hold |
Tonight's Catalysts 🧨
NVDA: AI demand is strong, but valuation is now the question
NVDA beat the top line at $81.6B (+85% YoY) and Data Center at $75.2B (+92% YoY). Management raised the dividend 25-fold and announced a fresh $80B buyback. The signal is clear: AI capex from hyperscalers has not slowed.
The intrigue sits in the guide. Q2 of $91B (±2%) deliberately excludes China revenue. If export relaxation surprises higher, NVDA has room to re-rate. If not, already-high expectations turn into a headwind.
WMT: revenue beat overshadowed by margin pressure
Walmart revenue of $177.8B beat consensus. E-commerce climbed 26% and advertising rose 37%, two high-margin catalysts still compounding.
The stock still dropped as fuel costs in distribution trimmed operating income by 250 bps. The investor focus is now on two questions: how long does this margin pressure last, and will consumers keep spending with yields this high.
Why the market is not yet fully risk-on
Tonight's setup keeps many AI names in cautious mode. NVDA beat yet shares slid. WMT topped revenue yet dropped on margin pressure. That pattern surfaces when expectations are priced in across crowded names.
Three forces below the surface. First, consensus expectations are already high for the AI earnings cycle. Second, profit-taking is active after this year's rally. Third, the 10Y at 4.62% plus oil at $99 hold back rotation into long-duration names.
Pre-market Pulse 📊
Futures point to a flat-to-slightly-lower open. Semicap names (AVGO, TSM, ASML) trade mixed alongside the NVDA reaction. Mega-cap tech leaked broadly on Thursday as the 10Y pushed to 4.62%, and that pressure has not fully eased. Watch Nasdaq support and NVDA's pre-market reaction at the open.
Macro Notes 📝
WTI holds near $99.5/bbl and Brent above $110, keeping energy risk on the radar. The 10Y at 4.62% continues to weigh on long-duration names. USD/IDR sits at 17,666 (+0.19% d/d), with the rupiah slightly softer. Thursday's Iran-US headline that briefly pulled the Russell 2000 higher was later flagged as bogus. That kind of volatility will stay noisy until a credible diplomatic confirmation lands.
Tonight's setup is not fully risk-on. NVDA beat yet the stock slid, a signal that expectations are already priced in across the AI complex. The play: keep core AI exposure if Nasdaq confirms support. Line up dip-buy candidates if the sell-the-news pattern extends into the semicap chain.
For readers focused on activating their portfolio, this is a good moment to re-evaluate your AI allocation. Check if your positioning is still anchored to the fundamental thesis, or has tilted heavy into names with stretched expectations.
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