Combining AMD's financial report, observe the market's attitude towards AI chip companies, and the possible trend of NVIDIA's financial report

AMD's earnings report appears almost flawless on the surface:
Q4 revenue of $10.27B, up 34% YoY, exceeding market expectations; data center revenue of approximately $5.4B, up 39% YoY, with the core engine remaining strong.
Meanwhile, the company's Q1 guidance midpoint is around $9.8B, still representing high YoY growth (company guidance of ~+32%).
Logically, this combination of "better-than-expected earnings + solid guidance" should be rewarded by the market. Yet the reality is: the market isn’t buying it, even choosing to respond by "cutting valuations."
Does this mean the market has become "harder to please"? I think rather than complaining about market sentiment, it’s better to acknowledge an old saying: the market is always right. The ones who truly need to stay calm are always the investors. We need to sit down and objectively analyze: what standards is the market using to price AI chip companies now?
Over the past year, the AI sector has attracted massive capital, especially for chip giants like AMD and NVIDIA with the strongest certainty, whose stock prices have risen significantly (AMD up ~108.81% over the past year, NVIDIA up ~50.20%. If measured from the low point during the "April tariffs" market panic, AMD has risen ~216.57% cumulatively, while NVIDIA has risen ~108.20%). At current levels, the market has become more selective, which is entirely consistent with common sense: when expectations are pulled very high, the market no longer pays a premium for "growth" but rather for "certainty, sustainability, and speed of delivery."
How is the market "nitpicking" AMD?
First, the market is focused on the "slope," not just "good YoY numbers."
AMD’s Q4 actually showed sequential growth (company disclosed Q4 revenue up +11% QoQ).
But what the market is really sensitive to is: the company’s Q1 guidance midpoint implies a ~-5% QoQ decline. In other words, even with high YoY growth, short-term capital seeing "a pullback next quarter" will exit first.
Second, the market is starting to ask: how much of this "good" is repeatable?
AMD was very explicit in its announcement: Q4 benefited from ~$360M in MI308-related inventory reserve releases, while China-related MI308 revenue was ~$390M; the company even noted: excluding these two items, Q4 non-GAAP gross margin would be around 55%.
In other words, the market is worried: part of this beat might have a "window/one-time" component. Reuters also mentioned: without China-related sales, AMD’s data center revenue might have missed expectations.
Third, what the market fears most is "delivery skewed toward the second half."
Management indicated that more significant volume for AI servers is likely in H2 2026. The logic for short-term capital is simple—if you say H2 will be stronger, I’ll exit first and wait for you to deliver.
Fourth, on valuation: high-expectation assets have almost zero "margin for error."
AMD’s Q1 non-GAAP gross margin guidance of ~55% isn’t bad, even slightly above market expectations; but in the market’s comparison framework, it’s still significantly lower than NVIDIA’s often-discussed higher margin levels, so when the sector cools overall, high-valuation AMD getting multiple compression isn’t surprising.
So the conclusion is actually clear: AMD’s earnings aren’t bad, and fundamentals haven’t deteriorated noticeably; the problem is that the market’s expectations for it have changed.
In the past, scoring 90 was enough—now it must be 99. As long as there’s anything "less than perfect," the market reprices with a "valuation cut."

Understanding AMD’s pricing logic, what might happen with NVIDIA’s earnings?
For NVIDIA, I focus on three things:
First, AI CapEx doesn’t decline; second, market competitiveness doesn’t decline; third, valuations aren’t too outrageous.
1) AI CapEx: Core demand is likely still there (but the market will watch "delivery speed")
AMD’s strong data center business shows that AI/data center demand remains robust; as the leader, NVIDIA is unlikely to fare poorly in the big picture.
Meanwhile, recent earnings from big tech also emphasize continued AI investment, e.g., Meta significantly raised its annual CapEx range (Meta 2026 CapEx guidance: $115B–$135B).
2) Competitiveness & gross margins: NVIDIA’s "pricing power narrative" remains strong, but the market will be more sensitive
AMD’s Q1 non-GAAP gross margin guidance of 55% is, by comparison logic, slightly positive for NVIDIA: it suggests NVDA’s high-margin/pricing power narrative still has room for advantage.
But at the same time, AMD is moving toward "selling full AI systems," meaning competition is escalating: the future battle won’t just be about chip performance but also ecosystems, software stacks, delivery, and system capabilities.
While this is NVIDIA’s strength, it also means: if the industry starts "price-cutting" to grab share, the market will immediately ask—can NVIDIA’s gross margins hold?
3) Valuations: Not outrageous, but "margin for error" remains very low
NVIDIA’s forward P/E is currently in the low-20s range, which isn’t extreme relative to the most euphoric phases.
But judging by the market’s attitude toward AMD, for these "ultra-high-expectation assets," any mention of "short-term slowdown" in earnings or even minor flaws could lead to rapid multiple compression.

If there’s a "valuation cut" post-earnings, when can long-term investors add?
For NVIDIA, revenue, data center revenue, etc., will likely still look great. What the market will really "nitpick" boils down to two things:
First, whether gross margin guidance is pressured by "price/competition."
Gross margins are essentially a mirror of NVIDIA’s market competitiveness and pricing power—if margins hold, the competitiveness narrative holds; if margins weaken noticeably due to price cuts/competition, it’s not just a "valuation cut" but a repricing of fundamentals.
Second, whether valuations reach "cheap" levels without simultaneous earnings deterioration.
If the stock is sold off post-earnings but gross margins remain strong, earnings expectations aren’t meaningfully revised down, and forward P/E drops further—that’s the classic "valuation cut = free money" scenario: the market dumps shares in short-term sentiment, giving long-term capital a more comfortable entry point.

Not investment advice