Nvidia's stock has dropped even though the massive
artificial intelligence (AI) chip maker easily exceeded forecasts after seeing
a more than twofold increase in revenue.
Over the course of three months, Nvidia reported record revenues of $30 billion
(£24.7 billion).
The company's stock market worth has increased to almost $3 trillion, making it
one of the largest winners from the AI boom.
The most recent data, however, suggest "that rate of growth was starting
to slow," according to Simon French, head of research at Panmure Liberum,
even though analysts had become accustomed to Nvidia generating
"spectacular" sales growth.
Sales rise of $28.7 billion was predicted by analysts for
the three months ending July 28.
This was eclipsed by Nvidia, whose revenues rose by 122% during the same time
previous year.
However, during New York's after-hours trade, Nvidia's share price dropped by
6%.
According to Matt Britzman, senior stock analyst at Hargreaves Lansdown,
"it's less about just beating estimates now." "Markets expect
them to be shattered and it’s the scale of the beat today that looks to have
disappointed a touch."
"Generative AI will revolutionise every industry," stated Jensen
Huang, chief executive of Nvidia, when announcing the most recent results.
However, Mr French told the BBC that "you've got to keep growing at
spectacular rates if you're going to raise expectations that high."
He went on to say that although their next generation
Blackwell processor "has faced some production delays and that perhaps is
one of the reasons why Wall Street after hours sold off the stock," the
company's existing AI chip, known as Hopper, is selling well.
Wall Street goes into a buying and selling frenzy when Nvidia releases its
quarterly earnings.
The Wall Street Journal said that Mr. Huang, known for his trademark leather
jacket, had been called the "Taylor Swift of tech" and that a
"watch party" had been scheduled in Manhattan.
Forrester senior analyst Alvin Nguyen told the BBC that Mr. Huang and Nvidia
had taken on the role as the "face of AI."
Although this has benefited the business thus far, Mr.
Nguyen noted that if AI falls short of expectations after businesses have spent
billions of dollars in the technology, it might reduce the company's price.
"One thousand AI use cases is insufficient. You require a million."
Additionally, Mr. Nguyen stated that Nvidia has a "software
ecosystem" and market-leading solutions that its customers have been
utilising for decades because to its first-mover advantage.
Although he acknowledged that it would take time, he predicted that competitors
like Intel might "chip away" at Nvidia's market share if they
produced a superior product.
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