Tom Lee highlights unusual Nvidia pattern after earnings gain evaporates

Nvidia (NVDA) surged 8.74% on August 27 following a record-breaking quarter. Fundstrat's Tom Lee noted the chipmaker rarely sees a positive move after strong earnings.

Lee described the reaction as a sign of market health. But the gains lasted just a single session, and Nvidia dropped 4.57% on Friday to $217.55.

A Pattern Nvidia Rarely Breaks

Nvidia has consistently exceeded Wall Street expectations for years. The stock declined after each of its previous four earnings reports. Heading into this one it had lost momentum, falling for seven straight sessions from August 14 to August 24, sliding from $225.30 to $208.48.

When the results came in, Nvidia's post-earnings turnaround pushed the stock to $227.98, adding roughly $440 billion in market value in a single day.

The quarter was decisive. Revenue reached $96.2 billion, up 106% year over year. Nvidia forecast current-quarter revenue of $108 billion.

Why the Rest of the AI Trade Lagged

Lee believes it came down to a funding issue. Investors who were underweight Nvidia had to sell other holdings to buy it.

Software stocks moved in the opposite direction, with Salesforce jumping 22.58% on its own results, becoming one of several stocks that outperformed Nvidia that day.

Lee also highlighted the price-to-earnings (PE) ratio. Nvidia trades at 27.5 times trailing earnings but just 18 times forward estimates. Earnings projections are rising faster than the share price.

“The thing that stands out is Nvidia’s multiple is still very low. So, they’ve got these huge revisions. The stock hasn’t kept up. Now the PE keeps contracting,” Tom Lee, Fundstrat managing partner and head of research, speaking on CNBC.

Not everyone shares that view. Jay Goldberg of Seaport Research Partners holds the only sell rating on the stock. He argues that sold-out supply constraints limit upside, as Nvidia cannot ship chips already promised to customers.

Lee identified another risk. Growing opposition to new data centers is becoming an election issue, and some Republican governors now support a moratorium.

The snowballing opposition to data centers in communities across the U.S. has transformed the midterm election landscape, thrown a wrench into the plans of the world's richest companies and brought perhaps the industry's biggest booster, President Trump, to its defense.…

— PBS News (@NewsHour) August 28, 2026

The pattern broke on Thursday. By Friday it had closed again, with roughly $250 billion of the gain erased.