Originally published at: Nvidia’s earnings report and its impact – InvestEngine Insights
Wednesday evening saw AI giant Nvidia report its earnings for the last three months, recording $30.04 billion in revenue.
Despite these excellent results, the stock still fell 8% after hours. The company more than doubled its revenue, up 122% from a year earlier, beat earnings expectations with 68 cents vs 65 cents estimates, announced $50bn in share buybacks, and even raised future guidance. Its margins are over 50% – five times the average margin for an S&P 500 company.
It was, however, not enough for a company which the market demands absolute perfection from. Investors disliked that forecasts for the current quarter weren’t raised as much as in previous quarters, and also didn’t hear enough reassurance on how quickly the company’s next-generation Blackwell chip will roll out. This is a good reminder that stock markets don’t react to “good” or “bad” news – they react to better/worse than expectations.
Despite an exceptional set of results, the bar was still set too high.
Market impact has been limited
Despite the stock generally being regarded as a barometer for the wider AI/tech sector (they are now synonymous), the market impact has been limited. US futures indicate the S&P 500 opening in positive territory on Thursday, up 0.05%, and the tech-heavy NASDAQ only marginally down. The UK and European markets remain relatively insulated from US tech moves, having few technology companies themselves, and are both up this morning.