Nvidia Trades at 22× Despite $78B Q1 Beat, China Rival Deploys Zhenwu 810E
Shares sank 5.5% after Nvidia guided first-quarter revenue of $78 billion versus a $73 billion consensus, yet trades at 22 times forward earnings, below 37 times average. Alibaba introduced a 7.9 yuan coding tool (40 yuan thereafter) and deployed its Zhenwu 810E chip in 10,000-card clusters for 400+ customers to challenge Nvidia’s H20.
1. Nvidia’s Q1 Guidance and Valuation
Nvidia guided first-quarter revenue of $78 billion, surpassing the $73 billion consensus, but its shares fell 5.5% on the day. The stock now trades at roughly 22 times forward earnings, well below its five-year average of 37 times.
2. Market Concerns About AI Spending
Investors are questioning whether the surge in AI infrastructure spending can sustain current levels after pledges from major developers, raising concerns that any slowdown could dent Nvidia’s future revenue growth and valuation.
3. Alibaba’s Low-Cost AI Platform and Chip Challenge
In China, Alibaba rolled out a low-cost AI coding platform at 7.9 yuan for the first month (40 yuan thereafter) and began deploying its self-developed Zhenwu 810E AI training chip in 10,000-card clusters across 400-plus enterprise clients, positioning it as a competitor to Nvidia’s H20 processor.
4. Broader Risk-Off Sentiment
Broader risk-off sentiment weighed on U.S. futures, reflecting market jitters over technology valuations and potential macroeconomic headwinds that could further pressure high-growth stocks like Nvidia.