Nvidia shares fell even though the AI chip giant comfortably beat expectations after more than doubling its sales.
Nvidia has announced record revenues of $30bn (£24.7bn) over a three-month period.
The company has been one of the biggest beneficiaries of the AI boom, with its stock market value rising to more than $3 trillion.
But while analysts have grown accustomed to Nvidia delivering “spectacular” sales growth, the latest results suggest “the growth rate is starting to slow,” said Simon French, head of research at Panmure Liberum.
Analysts had expected sales to grow by $28.7 billion in the three months to July 28.
Nvidia exceeded that number by increasing revenue by 122% compared to the same period last year.
But Nvidia’s stock price fell 6% in after-hours trading in New York.
“It’s not just about beating estimates now. Markets are expecting it to crash, and the scale of today’s outperformance seems a bit disappointing,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
“Generative AI will revolutionize every industry,” said NVIDIA CEO Jensen Huang, announcing the latest findings.
But French told the BBC: “If you’re going to raise expectations that high, you’ve got to keep growing at incredible rates.”
He added that while the current AI chip — called Hopper — is selling well, Blackwell’s next-generation chip “has had some production delays and that may be one of the reasons why Wall Street sold off the stock after hours.”
Nvidia’s results have become a quarterly event that sends Wall Street into a frenzy of buying and selling stocks.
A “watch party” was scheduled to take place in Manhattan, according to the Wall Street Journal, while Mr. Hwang, known for his signature leather jacket, was dubbed “Iron Man.” Taylor Swift Technology.
Alvin Nguyen, a senior analyst at Forrester, told the BBC that both Nvidia and Huang had become “the face of AI”.
That has helped the company so far, Nguyen said, but it could also hurt its valuation if AI fails to deliver the desired results after companies have invested billions of dollars in the technology.
“A thousand use cases for AI are not enough, you need a million.”
Mr Nguyen also said Nvidia’s pioneering advantage means it has market-leading products that its customers have spent decades using and a “software ecosystem”.
He said competitors, such as Intel, could “eat away” Nvidia’s market share if they succeeded in developing a better product, though he said that would take some time.
“Devoted student. Bacon advocate. Beer scholar. Troublemaker. Falls down a lot. Typical coffee enthusiast.”