Nvidia blew past Wall Street expectations for its first fiscal quarter, but investors aren't cheering. The chipmaker posted revenue of $81.6 billion for the period ended April 28, well above the $78.8 billion analysts were looking for. Adjusted earnings per share came in at $1.87, beating the $1.76 consensus, and net income hit $58.3 billion. Yet the stock is trading at $223 as of Wednesday, down from its May 14 peak of $236. The disconnect? Gross margin stalled at roughly 75% — right in line with Street forecasts and a sign that the explosive growth phase may be leveling off.
Why the margin pause matters
Nvidia's gross margin has been a key metric for investors watching how much pricing power the company retains amid surging demand for AI chips. At 75%, it's flat versus the prior quarter and didn't surprise anyone. The data center business, which accounts for the bulk of revenue, grew 92% year over year to $75.2 billion. Edge computing added $6.4 billion, up 29%. But one direct customer alone made up 22% of total revenue — a concentration risk that's hard to ignore. Meanwhile, inventory and supply commitments on the balance sheet swelled to $95.2 billion, suggesting Nvidia is betting big on future demand but also carrying more financial weight.
Technical indicators flash caution
Two momentum gauges are sending warning signals. The Chaikin Money Flow (CMF) peaked at 0.57 on April 28 and has since collapsed to 0.09 as of May 21. That's a bearish divergence — money flow weakened even as the stock price kept climbing to its May 14 high. The Relative Strength Index (RSI) paints a similar picture: between April 27 and May 14, price made higher highs while the RSI made lower highs. Classic divergence that often precedes a pullback.
What the options market is saying
Options traders are turning more defensive. Nvidia's put-call volume ratio rose from 0.38 before earnings to 0.46 after the report, signaling increased buying of put options as hedges or outright bearish bets. The open interest put-call ratio now sits at 0.79, barely below the pre-earnings level of 0.80. That pattern looks familiar: after Nvidia's February 25 earnings, a similar shift in put-call activity preceded a correction from $195 to $183.
Key price levels to watch
For now, $226 is the immediate decider. If Nvidia can push and hold above $227 on rising volume, the bullish flag pattern remains intact. From there, Fibonacci extension targets kick in at $245, $253, $262, $274, and $289. Below that, the $217 swing low is the first line of defense. A break below $194 would invalidate the flag entirely and suggest a deeper move lower. Whether the stock confirms the flag or breaks down depends on whether buying interest returns after the earnings-driven jitters.
