Nvidia's forecast dampens AI enthusiasm in other tech stocks
Nvidia and other technology heavyweights fell late on Wednesday, a discouraging sign for investors betting that a strong forecast from the dominant seller of AI chips would fuel fresh gains in Wall Street's most valuable companies.
Nasdaq futures fell about 1% following Nvidia's quarterly earnings report, suggesting traders expect tech stocks to lose ground on Thursday.
Nvidia dropped almost 7% and lost $200 billion in stock market value after it forecast third-quarter gross margins that could miss market estimates and revenue that was largely in line. A handful of other AI-related companies shed around $100 billion in combined value.
Shares of Broadcom and Advanced Micro Devices were each down about 2%. Microsoft and Amazon each dipped almost 1%.
If Wednesday's late-day dip in Nvidia shares extends into Thursday, it would be well short of the 11% price swing the options market had priced for the shares, according to data from options analytics firm ORATS.
Surging demand for its AI chips helped Nvidia crush consensus analyst estimates for several quarters, a trend that led investors to expect the company to exceed forecasts by higher and higher margins.
Nvidia's soft forecasts overshadowed a beat on second-quarter revenue and adjusted earnings as well as the unveiling of a $50 billion share buyback.
«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
