Despite reporting record-breaking sales figures for the most recent quarter, Nvidia’s shares have fallen, according to BBC.
Nvidia, a leading player in the artificial intelligence (AI) chip market, posted revenues of $30 billion (£24.7 billion) for the three-month period ending July 28, more than doubling its sales compared to the same period last year.
The company’s performance significantly exceeded analysts’ expectations, who had forecasted revenues of $28.7 billion. Nvidia’s revenue surge is a 122% increase year on year, reflecting the company’s significant role in the ongoing AI boom. This performance had previously increased Nvidia’s market capitalization to more than $3 trillion.
However, Nvidia’s share price fell by 6% in after-hours trading on Wall Street. Analysts have noted that while Nvidia’s sales growth was impressive, the pace of this growth appeared to be slowing. Simon French, head of research at Panmure Liberum, suggested that the market had grown accustomed to Nvidia’s extraordinary growth rates and that a slower growth trajectory might have contributed to the stock decline.
According to Matt Britzman, a senior equity analyst at Hargreaves Lansdown, the market’s reaction was more about the size of Nvidia’s earnings beat than its ability to exceed expectations. He pointed out that the market’s expectations had been set extremely high, and even a significant beat could result in disappointment if it fell short of those lofty projections.
“Generative AI will revolutionize every industry,” stated Jensen Huang, Nvidia CEO.
Despite this optimism, some analysts believe that production delays with Nvidia’s next-generation Blackwell chip could be contributing to the stock’s decline. Simon French also stated that the company’s current AI chip, Hopper, is performing well, but future growth may be dependent on the timely release of new products.
Nvidia’s quarterly results often trigger significant market activity, and the company has become a high-profile entity in the tech industry, with Huang compared to a well-known celebrity. Alvin Nguyen, senior analyst at Forrester, emphasized that, while Nvidia currently leads the market, the company’s valuation could be jeopardized if AI technology fails to meet high expectations.
Nguyen also discussed the competitive landscape, stating that while Nvidia currently has a significant advantage due to its market-leading products and established software ecosystem, competitors such as Intel may challenge its market share in the future.
