Hong Kong stocks closed lower on Thursday as an AI-driven rally led by tech firms lost momentum following Nvidia's underwhelming quarterly results.

The Hang Seng Index fell 0.29%, or 69.64 points, at 23,718.29. The Hang Seng China Enterprises index also slid 0.66%, or 58.31 points, at 8,734.58.

US chip giant Nvidia logged a 78% year-over-year jump in revenue to $39.3 billion for the fiscal fourth quarter ended Jan. 26.

Despite exceeding analysts' predictions for fourth-quarter sales, Nvidia's outperformance was minimal, marking the smallest sales beat since February 2023. Similarly, earnings surpassed estimates by the narrowest margin since November 2022, according to Bloomberg data.

For the first quarter of fiscal 2026, Nvidia projects revenue of $43 billion, plus or minus 2%. Additionally, the company cautioned that gross margins would be lower than expected due to the accelerated launch of its new Blackwell chip design and potential US tariffs.

"Guidance was slightly underwhelming," Edward Jones analyst Logan Purk was quoted by Bloomberg as saying.

Meanwhile, Summit Insights analysts downgraded Nvidia to Hold from Buy, stating that the stock no longer presented a favorable risk-reward outlook.

Analysts also noted potential headwinds for Nvidia, specifically a reduction in demand for advanced AI chips as inference models become more common. Summit Insights expects Nvidia's revenue growth to slow in the second half of fiscal 2026.

Xiaomi (HKG:1810) led decliners with a 6% slide, while Alibaba (HKG:9988), Tencent (HKG:0700), and Meituan (HKG:3690) each retreated around 1%.