Despite publishing a blockbuster quarterly earnings report that featured a double beat and record revenue above $81 billion on May 21, Nvidia (NASDAQ: NVDA) suffered a sharp stock market drop in the subsequent session.
Specifically, between the morning and closing bells in Thursday’s session, NVDA shares dropped 1.77% to $219.51. Considering the semiconductor giant’s market capitalization crossed above $5 trillion in April for the second time, the May 21 fall erased $95 billion from the firm’s valuation.
The latest move also represented a continuation of the preceding decline – temporarily halted in the leadup to the filing – that overall saw NVDA equity slide 4.41% in a week and the blue-chip chipmaker’s market capitalization crash some $400 billion from the mid-May highs above $5.7 trillion.
Why Nvidia stock fell after double earnings beat?
While the stock market move appears surprising at face value, given the strong quarterly results and optimistic guidance revealed on May 20, it is largely consistent with a pattern that has regularly affected the equity following the filings.
Indeed, in the morning before the report, the popular TV analyst Jim Cramer predicted that Nvidia shares would enjoy a brief rally before getting pummeled into the red, while dismissing the validity of such performance.
A different Wall Street expert, Gordon Johnson of GLJ Research, previously linked the pattern to the options market, claiming the quarterly phenomenon is the result of simple market mechanics, and not company fundamentals.
So far, NVDA stock has successfully recovered from each such downturn, thus backing the estimate that the short-term moves are not indicative of genuine investor sentiment shifts with regard to the semiconductor giant.
When will Nvidia stock rally restart?
Elsewhere, there is a possibility that the latest Nvidia stock decline will persist at least in the mid-term. To begin with, despite the extended session leading to the May 22 open featuring a small initial rally, the equity flipped back into the red by press time.
Previously, investors proved rather unwilling to accept the chipmaker at valuations above $5 trillion – for reference, IMF data for 2026 shows that Germany’s nominal GDP stands at $5.45 trillion and Japan’s at $4.38 trillion – as seen with the relatively long decline from October 2025 highs.
Notably, the selling pressure that tends to follow Nvidia’s rise above the psychologically important threshold emerges despite fundamental analysis indicating NVDA stock remains relatively cheap even at the recent extremes.
Why June could be the most important month for Nvidia stock in 2026
In the long run, however, the chipmaker is likely to feature at least another strong rally, though the ultimate fate of the equity will remain closely linked to the continuation of the artificial intelligence (AI) boom and either the continued willingness of corporate clients to buy hardware without significant returns or AI firms’ ability to turn profitable.
Under the circumstances, the next major indicator of Nvidia stock’s long-term performance might come shortly after June 1 as Microsoft (NASDAQ: MSFT) swaps GitHub Copilot billing to a per-token basis.
Should the experiment prove that AI platforms remain appealing to users once the subsidies are removed, it would signal that the boom will continue and, perhaps, accelerate. Should the change lead to a user exodus, it could help burst the ‘AI bubble.’
Featured image via Shutterstock
