The Nvidia (NASDAQ:NVDA) fell 1% in post-market trading after its results were released late Wednesday (20 May). Even though it was a modest move, it made the fourth consecutive quarter in which the stock had fallen immediately after results were released.

Yet given the strong headline numbers, is the stock worth buying on this dip?

Running through the details

Nvidia reported fiscal Q1 revenue of $81.6bn, up 85% year on year. Given its market cap of over $5trn, that’s pretty impressive. Adjusted earnings per share also came in well ahead of analyst expectations. Looking ahead, the company guided for next-quarter revenue of approximately $91bn. Again, this was ahead of analyst estimates.

Therefore, the fall isn’t a result of poor performance. However, it does speak to the fact that investors have become accustomed to exceptional quarters, in which management not only smashes forecasts but obliterates them. This time, while the results were excellent, they perhaps weren’t spectacular enough to satisfy a market priced for perfection.

Another factor that caused some concern is profit margins. While Nvidia maintained gross margins around the 75% range, some investors are nervous about the cost of ramping production of its next-generation Blackwell AI chips. Blackwell demand is clearly enormous, but newer chips are more complex and expensive to manufacture. That creates concerns that margins may gradually tighten over time.

There’s also the China problem. CEO Jenen Huang said the company has “largely conceded” the Chinese market to Huawei. The report also confirmed that it assumes virtually no China data centre revenue in the current quarter due to US export restrictions. Given that China is such a huge market, this wasn’t the news people were hoping for.

The long-term horizon

Even though the immediate market reaction is disappointing, it’s not the end of the world. The share price is up 69% over the past year, showing that even though it underperforms immediately after earnings, the dip gets bought. Past performance does not guarantee future returns, but it does show this isn’t something to get that worried about.

The key point for me is that the AI infrastructure buildout still appears to be in the early innings. Hyperscalers, including the likes of Microsoft through to Alphabet, continue to spend aggressively on AI data centres, and Nvidia remains the clear market leader in accelerated computing.

What’s more, the valuation arguably isn’t as stretched as many assume. In fact, with a price-to-earnings ratio of 33.87, it’s below the Nasdaq 100 average ratio of 37.61!

Of course, risks remain. Competition in the AI space is among the most intense in the market. But for investors with a long-term investment horizon, I still believe Nvidia could be one of the winners of this decade. Therefore, I think it should be considered.

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Jon Smith has no positions in the shares mentioned.