Nvidia (NVDA.O), opens new tab shares fell more than 6% on Thursday after the company’s projection failed to live up to high expectations. However, some analysts argue that the little decline demonstrated investors’ continued faith in the generative AI boom, which has driven the chip giant’s stock higher this year.
On Wednesday, the business predicted revenue that was essentially in line with third-quarter gross margins, which might fall short of market expectations. However, the company’s announcement that it anticipates manufacturing of its next-generation Blackwell chips to ramp up in the fourth quarter allayed some investor fears.
After some of the session’s gains were reversed, shares of other semiconductor firms were mixed. Shares of Advanced Micro Devices (AMD.O), an open new tab, dropped 0.6%, while those of Broadcom (AVGO.O) concluded the day 0.8% down. Arm’s stock increased 5.3%.
With its shares still up 137% so far this year, Nvidia is a key player in the surge in American equities. A string of astronomical quarterly sales projections have contributed to those gains by inflating investors’ expectations for the company’s development.
“They won, but this was just one of those instances where there were a lot of expectations. “I don’t think they could have had a satisfactory number for everyone to be satisfied,” stated JJ Kinahan, president of online broker Tastytrade and CEO of IG North America.
The prediction came as the AI bellwether reported robust second-quarter results that exceeded Wall Street estimates and revealed a fresh $50 billion share buyback.
“When it comes to Nvidia, investors want more, more, and more,” AJ Bell investment analyst Dan Coatsworth stated.
“It looks like investors might not have taken the average of analyst forecasts to be the benchmark for Nvidia’s performance, instead they’ve taken the highest end of the estimate range to be the hurdle to clear.”
LSEG data shows that Nvidia projected sales for its fiscal third quarter of $32.5 billion, plus or minus 2%, as opposed to analysts’ projections of $31.8 billion. The revenue projection of $37.90 fell short of the upper end of market forecasts, but it still represents an 80% increase from the same quarter last year.
