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Nvidia shares fell more than 4 percent at the open on Thursday as the chipmaker’s latest earnings report failed to meet Wall Street’s high expectations, even though revenue more than doubled in the last quarter.
The declines initially led to a loss of more than $100 billion in the stock market value of the Silicon Valley-based company, which had jumped amid a spending boom in artificial intelligence.
Shortly after the stock market opened, the stock recovered and was trading around 3 percent below the previous day. Since the beginning of 2024, Nvidia shares have still risen by more than 150 percent.
In its latest results on Wednesday, the chipmaker said it expects third-quarter revenue of $32.5 billion, plus or minus 2 percent and just above analysts’ consensus expectations.
However, the number disappointed investors who are used to the chipmaker far outperforming Wall Street forecasts in the two years since ChatGPT launched.
For the three months ended July 28, revenue was $30 billion, up 122 percent from a year ago and above analysts’ forecasts of $28.7 billion.
“The revenue overperformance compared to expectations was the smallest in six quarters, so it’s not the kind of massive success that Nvidia has often reported,” said Henry Allen, macro strategist at Deutsche Bank.
On Wednesday, Nvidia tried to reassure investors that, despite production problems, the company will generate “multi-billion dollar sales” in the current fiscal year with the next generation of its powerful AI chips.
Chief Executive Jensen Huang told the Financial Times that delays in developing the next-generation AI processor would not affect the chipmaker’s plans to launch a new version of its flagship product every year.
Bank of America analyst Vivek Arya called Thursday’s price movements “quarterly noise” and said Nvidia continues to represent “unique growth at a very reasonable valuation.”
According to Mohit Kumar, strategist at Jefferies, some analysts believe that the chip manufacturer’s earnings are now as important to the US financial markets as the US Federal Reserve’s monetary policy decisions. The reason for this is the company’s role as an “indicator” for the entire technology industry.
