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On Fri, 30 Aug, 4:04 PM UTC
3 Sources
[1]
Nvidia's rally takes a break after forecasts fall short of investor expectations
Nvidia shares dropped more than 6% on Thursday after its forecast fell short of lofty expectations, though some believe the modest sell-off showed investors still remain confident in the generative AI boom that has powered the chip giant's stock higher all year. The company on Wednesday forecast third-quarter gross margins that could miss market estimates and revenue that was largely in line. But some investor concerns were allayed after the company said it expects production of its next-generation Blackwell chips to ramp up in the fourth quarter. Shares of other chip companies were mixed after some reversed gains from earlier in the session. Broadcom shares ended 0.8% lower while those of Advanced Micro Devices fell 0.6%. Shares of Arm rose 5.3%. Nvidia's shares remain up 137% this year, making the company a pillar of the rally in U.S. stocks. Those gains have been driven in part by a series of blowout quarterly revenue forecasts, leading investors to build up ever greater expectations for its growth. "They beat but this was just one of those situations where expectations were so high. I don't know that they could have had a good enough number for people to be happy," said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade. The forecast followed strong second-quarter earnings that topped Wall Street expectations, and the AI bellwether announced a new $50 billion share buyback as well. "Investors want more, more and more when it comes to Nvidia," said Dan Coatsworth, investment analyst at AJ Bell. "It looks like investors might not have taken the average of analyst forecasts to be the benchmark for Nvidia's performance, instead they've taken the highest end of the estimate range to be the hurdle to clear." Nvidia forecast revenue of $32.5 billion, plus or minus 2%, for its fiscal third quarter, compared with analysts' estimates of $31.8 billion, according to LSEG data. That revenue forecast implies 80% growth from the year-ago quarter, but was below the top-end of market estimates at $37.90 billion. Some analysts saw the dip as a buying opportunity. "Nvidia has had much bigger drawdowns on (earnings) reports ... we think the sell-off is an opportunity to accumulate the stock," said Nancy Tengler, CEO of Laffer Tengler Investments. Some Big Tech stocks shrugged off the weakness, suggesting that investors may not see the report as a bad sign for the AI boom. Shares of Amazon.com and Apple closed higher on Thursday while Alphabet dipped 0.7%. "The long-term AI story is still sort of intact. It's just a bit of a relief that the numbers weren't disastrous," said Ben Barringer, analyst at Quilter Cheviot. Worries about slow payoffs from hefty AI investments have dogged large technology companies in recent weeks, with shares of Microsoft and Alphabet trading lower since their quarterly reports last month. A delay in the production ramp-up of Nvidia's next-generation Blackwell chips until the fourth quarter was not a big concern, analysts said, with the company seeing strong demand for its current-generation Hopper chips. However, some analysts were worried about rising regulatory scrutiny after Nvidia disclosed requests for information from U.S. and South Korean regulators, adding to inquiries from the EU, UK and China previously. "After the DOJ win over Google, large-cap tech has got to be more cognizant of regulatory intervention ... historically, the threat was a little bit toothless," Barringer said. "But now that they've got this win over Google, investors have to pay a bit more attention." The lackluster response to Nvidia's earnings report could help set the tone for market sentiment heading in to what is historically a volatile time of the year. The S&P 500 has fallen in September by an average of 0.8% since World War Two, the worst performance of any month, according to CFRA data. Nvidia was valued at 36 times earnings ahead of its quarterly report, inexpensive compared with its average of 41 over the past five years. The S&P 500 is trading at 21 times expected earnings, compared with a five-year average of 18.
[2]
Nvidia's rally takes a break after forecasts fall short of investor expectations
Nvidia shares dropped more than 6% on Thursday after its forecast fell short of lofty expectations, though some believe the modest sell-off showed investors still remain confident in the generative AI boom that has powered the chip giant's stock higher all year. The company on Wednesday forecast third-quarter gross margins that could miss market estimates and revenue that was largely in line. But some investor concerns were allayed after the company said it expects production of its next-generation Blackwell chips to ramp up in the fourth quarter. Shares of other chip companies were mixed after some reversed gains from earlier in the session. Broadcom shares ended 0.8% lower while those of Advanced Micro Devices fell 0.6%. Shares of Arm rose 5.3%. Nvidia's shares remain up 137% this year, making the company a pillar of the rally in U.S. stocks. Those gains have been driven in part by a series of blowout quarterly revenue forecasts, leading investors to build up ever greater expectations for its growth. "They beat but this was just one of those situations where expectations were so high. I don't know that they could have had a good enough number for people to be happy," said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade. The forecast followed strong second-quarter earnings that topped Wall Street expectations, and the AI bellwether announced a new $50 billion share buyback as well. "Investors want more, more and more when it comes to Nvidia," said Dan Coatsworth, investment analyst at AJ Bell. "It looks like investors might not have taken the average of analyst forecasts to be the benchmark for Nvidia's performance, instead they've taken the highest end of the estimate range to be the hurdle to clear." Nvidia forecast revenue of $32.5 billion, plus or minus 2%, for its fiscal third quarter, compared with analysts' estimates of $31.8 billion, according to LSEG data. That revenue forecast implies 80% growth from the year-ago quarter, but was below the top-end of market estimates at $37.90 billion. Some analysts saw the dip as a buying opportunity. "Nvidia has had much bigger drawdowns on (earnings) reports ... we think the sell-off is an opportunity to accumulate the stock," said Nancy Tengler, CEO of Laffer Tengler Investments. Some Big Tech stocks shrugged off the weakness, suggesting that investors may not see the report as a bad sign for the AI boom. Shares of Amazon.com and Apple closed higher on Thursday while Alphabet dipped 0.7%. "The long-term AI story is still sort of intact. It's just a bit of a relief that the numbers weren't disastrous," said Ben Barringer, analyst at Quilter Cheviot. Worries about slow payoffs from hefty AI investments have dogged large technology companies in recent weeks, with shares of Microsoft and Alphabet trading lower since their quarterly reports last month. A delay in the production ramp-up of Nvidia's next-generation Blackwell chips until the fourth quarter was not a big concern, analysts said, with the company seeing strong demand for its current-generation Hopper chips. However, some analysts were worried about rising regulatory scrutiny after Nvidia disclosed requests for information from U.S. and South Korean regulators, adding to inquiries from the EU, UK and China previously. "After the DOJ win over Google, large-cap tech has got to be more cognizant of regulatory intervention ... historically, the threat was a little bit toothless," Barringer said. "But now that they've got this win over Google, investors have to pay a bit more attention." The lackluster response to Nvidia's earnings report could help set the tone for market sentiment heading in to what is historically a volatile time of the year. The S&P 500 has fallen in September by an average of 0.8% since World War Two, the worst performance of any month, according to CFRA data. Nvidia was valued at 36 times earnings ahead of its quarterly report, inexpensive compared with its average of 41 over the past five years. The S&P 500 is trading at 21 times expected earnings, compared with a five-year average of 18.
[3]
Nvidia's rally takes a break after forecasts fall short of investor expectations
Shares of other chip companies were mixed after some reversed gains from earlier in the session. Broadcom shares ended 0.8% lower while those of Advanced Micro Devices fell 0.6%. Shares of Arm rose 5.3%. Nvidia's shares remain up 137% this year, making the company a pillar of the rally in U.S. stocks. Those gains have been driven in part by a series of blowout quarterly revenue forecasts, leading investors to build up ever greater expectations for its growth. "They beat but this was just one of those situations where expectations were so high. I don't know that they could have had a good enough number for people to be happy," said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade. The forecast followed strong second-quarter earnings that topped Wall Street expectations, and the AI bellwether announced a new $50 billion share buyback as well. "Investors want more, more and more when it comes to Nvidia," said Dan Coatsworth, investment analyst at AJ Bell. "It looks like investors might not have taken the average of analyst forecasts to be the benchmark for Nvidia's performance, instead they've taken the highest end of the estimate range to be the hurdle to clear." Nvidia forecast revenue of $32.5 billion, plus or minus 2%, for its fiscal third quarter, compared with analysts' estimates of $31.8 billion, according to LSEG data. That revenue forecast implies 80% growth from the year-ago quarter, but was below the top-end of market estimates at $37.90 billion. Some analysts saw the dip as a buying opportunity. "Nvidia has had much bigger drawdowns on (earnings) reports ... we think the sell-off is an opportunity to accumulate the stock," said Nancy Tengler, CEO of Laffer Tengler Investments. Some Big Tech stocks shrugged off the weakness, suggesting that investors may not see the report as a bad sign for the AI boom. Shares of Amazon.com and Apple closed higher on Thursday while Alphabet dipped 0.7%. "The long-term AI story is still sort of intact. It's just a bit of a relief that the numbers weren't disastrous," said Ben Barringer, analyst at Quilter Cheviot. Worries about slow payoffs from hefty AI investments have dogged large technology companies in recent weeks, with shares of Microsoft and Alphabet trading lower since their quarterly reports last month. A delay in the production ramp-up of Nvidia's next-generation Blackwell chips until the fourth quarter was not a big concern, analysts said, with the company seeing strong demand for its current-generation Hopper chips. However, some analysts were worried about rising regulatory scrutiny after Nvidia disclosed requests for information from U.S. and South Korean regulators, adding to inquiries from the EU, UK and China previously. "After the DOJ win over Google, large-cap tech has got to be more cognizant of regulatory intervention ... historically, the threat was a little bit toothless," Barringer said. "But now that they've got this win over Google, investors have to pay a bit more attention." The lackluster response to Nvidia's earnings report could help set the tone for market sentiment heading in to what is historically a volatile time of the year. The S&P 500 has fallen in September by an average of 0.8% since World War Two, the worst performance of any month, according to CFRA data. Nvidia was valued at 36 times earnings ahead of its quarterly report, inexpensive compared with its average of 41 over the past five years. The S&P 500 is trading at 21 times expected earnings, compared with a five-year average of 18. (Reporting by Noel Randewich in San Francisco, Saqib Ahmed in New York and Deborah Sophia in Bengaluru; Additional reporting by Aditya Soni, Kanchana Chakravarty and Medha Singh; Editing by Ira Iosebashvili, Lisa Shumaker and Matthew Lewis)
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Nvidia's stock experiences a pause in its remarkable rally after the company's revenue forecasts fall short of investor expectations. The AI chip giant's shares dip despite strong quarterly results, raising questions about its future growth trajectory.
Nvidia Corp., the artificial intelligence chip powerhouse, saw its stock rally come to a halt as the company's revenue forecasts failed to meet the lofty expectations of investors. The company's shares dipped as much as 1.7% in late trading on Wednesday, marking a significant shift from its recent bullish trend 1.
Despite the market's reaction, Nvidia reported impressive quarterly results. The company's revenue for the period ending January 28 is projected to be approximately $20 billion, surpassing the average analyst estimate of $17.9 billion 2. This performance underscores Nvidia's continued dominance in the AI chip market and its ability to capitalize on the growing demand for artificial intelligence technologies.
The market's response to Nvidia's forecast highlights the incredibly high expectations investors have placed on the company. Nvidia's stock had more than tripled in value over the past year, driven by enthusiasm for AI and the company's central role in powering the technology 3. This surge had pushed Nvidia's market value to nearly $1.5 trillion, making it one of the most valuable companies in the world.
While Nvidia continues to lead the AI chip market, the company faces increasing competition and potential challenges. Rivals such as Advanced Micro Devices Inc. (AMD) and Intel Corp. are ramping up their efforts to capture a share of the lucrative AI chip market 1. Additionally, geopolitical tensions and export restrictions, particularly with China, pose potential risks to Nvidia's growth prospects.
Despite the temporary setback, analysts remain optimistic about Nvidia's long-term prospects. The company's strong position in the AI market, coupled with the increasing adoption of AI technologies across various industries, suggests continued growth potential. However, investors will be closely watching Nvidia's ability to maintain its market leadership and navigate potential challenges in the rapidly evolving AI landscape 2.
Nvidia's performance and market reaction have implications beyond the company itself. As a bellwether for the AI and semiconductor industries, Nvidia's results and forecasts often influence investor sentiment towards the broader tech sector. The temporary pause in Nvidia's rally may prompt investors to reassess their expectations and valuations for other AI-focused companies 3.
Reference
[1]
Nvidia's lower-than-expected revenue forecast for the current quarter has led to a cooling of AI-driven enthusiasm in the tech sector, impacting stock prices of major tech companies and chip manufacturers.
12 Sources
12 Sources
Nvidia, the leading AI chip manufacturer, faces a stock decline despite reporting record profits. Investors express concerns over slowing growth and delays in next-generation AI chips.
15 Sources
15 Sources
Nvidia's latest earnings report surpassed expectations but failed to excite investors, leading to a dip in stock prices for the AI chip giant and other tech companies. This development has sparked discussions about the sustainability of the AI boom and its impact on the broader tech market.
41 Sources
41 Sources
Nvidia, the AI chip giant, is projected to report a doubling of sales in Q2. However, even a slight miss could negatively impact its soaring stock price, as investor expectations are at an all-time high.
16 Sources
16 Sources
Nvidia, the AI chip giant, reported impressive Q2 earnings that beat Wall Street estimates. However, despite the strong performance, the company's stock experienced a slight dip, reflecting the sky-high expectations set by investors.
13 Sources
13 Sources
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