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Nvidia delivered incredible earnings once again.

Here’s a quick recap from the earnings report of the largest company on earth:

• Nvidia posted adjusted earnings per share of $1.62, beating Wall Street’s consensus estimate of $1.53.

• Revenue came in at $68.1 billion, ahead of expectations of $66.1 billion.

• Gross margin also beat, at 75.2% versus the 75.0% estimate.

• Data center revenue rose 75% year over year to $62.3 billion, above the $60.7 billion estimate. Nvidia said hyperscalers accounted for slightly more than half of data center revenue this quarter.

• The outlook was even stronger than the January quarter. For the current quarter, Nvidia guided to a revenue midpoint of $78 billion, well above the $72.7 billion consensus.

• The guidance is even more impressive when you consider it includes no contribution from China. China is a roughly $50 billion market per year.

In short, it was a superb quarter with incredible guidance. But even that was not enough to convince Wall Street. The stock is down more than 5% today. This is the kind of market where great results are simply not good enough. And Nvidia is not alone here. Dozens of stocks are getting brutally punished today after they missed earnings or did not meet investors expectations.

One thing people often forget is how emotional markets are in the short term. Large price swings can swing can happen even for no good reasons. Fear, excitement, headlines, and investors sentiment sometimes matter more than the actual numbers, at least for a while. That’s why it’s important to zoom out and not react to every move.

To put this into perspective, Nvidia is trading at roughly the same price to earnings ratio it had when ChatGPT launched. Since then it grew its revenues by 8x and continues to accelerate. Nvidia has become the backbone of AI infrastructure. Yet the valuation multiple has not expanded. It has actually compressed.

That means this is the cheapest Nvidia has been on a PE basis since the start of the AI boom, even after all this growth.

We have to deal with the fact that Ssort-term price action can be unpredictable and volatile.

But one thing is clear.

Demand for compute is not slowing down. It is speeding up. It is going exponential. We are at an inflection point for agentic AI.

1. Nvidia’s networking products are often purchased 4 to 6 months in advance of data center buildouts. Its networking business grew 162% year over year in Q3, which was an important sign of demand going into 2026. In this recent quarter, networking revenue grew even more and accelerated to 263% year-over-year growth. That is an insane number. It suggests the current NVL72 AI server cycle is strong and likely has several more quarters left to run.

2. In late December, Nvidia acquired the assets of AI inference chip startup Groq by hiring key employees and licensing the technology. It was expected that it would take years before there was clarity on how Nvidia would use Groq’s high-performance, low-cost AI inference technology. That assumption turned out to be wrong. Jensen said on the earnings call that he will share his ideas on how to incorporate Groq technology at the annual GTC conference next month already. He even said that Groq could be similar to its prior acquisition of Mellanox. Mellanox is one of the most successful acquisitions in the history of the technology industry.

3. Nvidia increased its supply-related agreements from $50.3 billion to $95.2 billion this quarter. That likely means Nvidia has secured key supplies like memory chips and wafers. Locking up component allocations ahead of major shortages gives Nvidia a meaningful advantage over the rest of its competition.

For whatever reason, Nvidia shares over the past few quarters have become unpredictable the day after earnings, even when the numbers are great. It’s always sold off the after. There are a few speculations as to why but the honest answer is nobody really knows.

What is clear is that Nvidia stock has tripled over the past 2 years despite these strange post-earnings reactions. Nvidia is now growing at a 70%+ rate and trades at a forward P/E of about 22, which is roughly a market multiple while growing several times faster than almost any other large company.

If Nvidia keeps this up, the stock will take care of itself, just like it has over the past few years.

Still that doesn’t mean you just ignore risk management and hope for the best. Staying calm doesn’t mean being careless. Because irrational behavior can last way longer than you expect. Way longer than you can stay comfortable. And there will be a time where even companies like Nvidia go through 80%+ drawdowns. I know because I’ve lived through several of them.

Markets are often not rationale in the short term. Prices can stay unjust, overpriced, or underpriced for months or even years. You can be right on the facts and still lose money if the timing is off. That’s the part people underestimate. And risk management is what keeps you alive during those periods.

There are a few ways to manage risk.

The first is position sizing. This means never letting a single position get so large that it can seriously hurt the portfolio if it goes wrong. Even great ideas fail. Keeping positions at a reasonable size makes sure one mistake does not take you out of the game. That’s why I’m a big proponent of adjusting (adding and trimming) positions accordingly.

The second is knowing when you are wrong. Every investment should start with a clear thesis and clear reasons for when to sell. If the facts change or the scenario didn’t play out, the position should be reduced or exited. The goal is not to be right every time. That’s impossible anyway. You should always plan for the worst case. leaning into positions that are working and when they are working. At the same time, it means cutting back exposure when something is not working, rather than hoping it turns around.

And the third is separating long-term and short-term positions. Long-term positions are based on multi-year trends, big-picture ideas, and secular growth trends. They are meant to ride through volatility and short-term noise. Short-term positions are different. They are driven by timing, sentiment, or specific catalysts and need to be managed more actively. Most people get into trouble when they mix these two up. Long-term positions get panic sold because of short-term price moves, or short-term trades are held too long and turn into long-term mistakes.