Nvidia fails to impress growth-hungry investors, shares fall
Nvidia's quarterly forecast on Wednesday failed to meet lofty expectations of investors who have driven a dizzying rally in its stock as they bet billions on the future of generative artificial intelligence.
Shares of the chipmaker fell 6% in after-hours trading, weighing on shares of other chipmakers. The report has been seen as a day of reckoning for the tech sector and the results were treated as mixed, despite heady growth and profit.
«Here's the issue,» said Ryan Detrick, chief market strategist at the Carson Group. «The size of the beat this time was much smaller than we've been seeing.» He added, «Even future guidance was raised, but again not by the tune from previous quarters. This is a great company that is still growing revenue at 122%, but it appears the bar was just set a tad too high this earnings season.»
The revenue and gross margin forecast for the current quarter were not far from analysts' expectations and failed to live up to a recent history of trouncing Wall Street's targets, overshadowing a beat on second-quarter revenue and adjusted earnings as well as the unveiling of a $50 billion share buyback.
In the last three consecutive quarters, Nvidia recorded revenue growth of more than 200%, and the company's capacity to surpass estimates is at increasingly greater risk as each success prompts Wall Street to raise its targets even higher.
CEO Jensen Huang played up insatiable demand for the company's powerful graphics processors that have become the workhorses for generative AI technology such
