Nvidia, the AI chip giant, has seen its shares fall despite reporting record-breaking sales of $30 billion.
The company's stock dropped sharply due to concerns over slowing growth and production delays, sparking fears of a tech bubble.
Key Takeaways
- Nvidia reported record revenues of $30 billion, surpassing analyst expectations.
- Despite the impressive sales figures, Nvidia's share price fell by up to 8% in after-hours trading.
- Concerns over slowing growth and production delays for the next-generation Blackwell chips contributed to the decline.
- The company's stock remains up about 150% for the year, making it one of the big winners in the US market.
Record Sales Amid AI Boom
Nvidia announced record revenues of $30 billion over a three-month period, comfortably beating analyst forecasts of $28.7 billion. The company has been a major beneficiary of the AI boom, with its market value soaring to over $3 trillion. However, the latest results indicate that the rate of growth is starting to slow.
Investor Concerns
Following the release of the results, Nvidia's share price fell by 6% in after-hours trading in New York. On Thursday, its shares were down about 2% in early trading. Analysts pointed to production delays for Nvidia's next-generation Blackwell chips as a key reason for the decline. The current AI chip, called Hopper, is selling well, but the delays have spooked investors.
Market Reaction
Nvidia's results have become a quarterly event that sends Wall Street into a frenzy. A "watch party" had been planned in Manhattan, highlighting the high expectations surrounding the company's performance. Despite the drop, Nvidia's stock remains about 150% up so far in 2024, making it one of the big winners in the US market.
Broader Impact on Tech Stocks
The drop in Nvidia's share price had a ripple effect on other tech stocks. Companies like Google, Apple, and Amazon saw their stock prices rise as Nvidia's partial recovery buoyed the market. However, the sudden drop wiped more than $100 billion from Nvidia's stock market value, raising fears of a tech bubble.
Future Outlook
Nvidia's chief executive, Jensen Huang, remains optimistic about the future, stating that "Generative AI will revolutionise every industry." However, analysts caution that the company needs to continue growing at spectacular rates to meet high investor expectations. The delays in the Blackwell chip production and the potential for rivals to chip away at Nvidia's market share add to the uncertainty.
Conclusion
While Nvidia's record-breaking sales highlight its dominant position in the AI chip market, concerns over slowing growth and production delays have led to a significant drop in its share price. The company's future performance will be closely watched as it navigates these challenges.
Sources
- AI chip giant Nvidia's shares sink despite record sales of $30bn, BBC.
- Nvidia shares fall on slowing growth and production concerns | Nvidia | The Guardian, The Guardian.
- Nvidia earnings spark rare share price fall across US tech stocks | Business News | Sky News, Sky News.
- $100bn wiped off Nvidia amid tech bubble fears - latest updates, The Telegraph.
- Tech bubble fears grow as Nvidia shares slump, The Telegraph.
