Nvidia’s Stock Falls Despite Record Sales
Despite Nvidia’s impressive record revenues of $30 billion over a three-month period, the company’s stock has taken a hit. The artificial intelligence (AI) chip giant exceeded analysts’ expectations by doubling its sales, but its share price fell by 6% in after-hours trading in New York on Wednesday.
Analysts had predicted sales growth of $28.7 billion for the same period, but Nvidia surpassed this with a 122% increase compared to the previous year. However, the market reaction to the results was less enthusiastic than anticipated, with shares down about 2% in early trading on Thursday.
“It’s less about just beating estimates now,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. “Markets expect them to be shattered and it’s the scale of the beat today that looks to have disappointed a touch.”
Nvidia’s chief executive Jensen Huang remains optimistic about the future, stating that “Generative AI will revolutionize every industry.” However, some concerns have been raised about the company’s ability to maintain its spectacular growth rates.
Analyst Simon French pointed out that while Nvidia’s current AI chip, Hopper, is performing well, the next generation Blackwell chip has faced production delays. This, along with high market expectations, may have contributed to the stock price decline.
Despite the recent setback, Nvidia remains one of the big winners in the US market, with its stock up about 150% so far in 2024. The company’s results have become a highly anticipated event on Wall Street, with CEO Jensen Huang being dubbed the “Taylor Swift of tech” for his charismatic leadership.
While Nvidia currently holds a market-leading position in AI technology, rivals like Intel could pose a threat if they develop superior products. However, analysts believe that Nvidia’s first-mover advantage and strong customer base give it a competitive edge that will be difficult to overcome in the short term.
