Nvidia stock slips even after earnings top Wall Street estimates and demand for AI chips surges

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Nvidia has led the artificial intelligence boom to become one of the stock market’s biggest companies, as tech giants continue to spend heavily on the company’s chips and data centers needed to tra…

A sign for a Nvidia office building is shown in Santa Clara, Calif., Wednesday, Aug. 7, 2024. LOS ANGELES — Nvidia may have exceeded Wall Street estimates as its profit jumped — buffeted by the chipmaking dominance that has cemented Nvidia’s place as the poster child of the artificial intelligence boom — but investors seemed less than impressed.

Ryan Detrick, chief market strategist at Carson Group, said that despite growing revenue “it appears the bar was just set a tad too high this earnings season.” “The people who are investing in Nvidia infrastructure are getting returns on it right away,” Jensen Huang, founder and CEO of Nvidia, said on a call with analysts. “It’s the best ROI infrastructure, computing infrastructure investment you can make today.”

Through the year’s first six months, Nvidia’s stock price soared nearly 150%. At that point, it was trading at a little more than 100 times the company’s earnings over the prior 12 months. That’s much more expensive than it’s been historically and than the S&P 500 in general. That’s why analysts warn of a selloff if Wall Street sees any indication that AI demand is waning.

“This is the most watched earnings — not just in tech, but in the market, in many years,” he said. “Investors will initially overreact to any sort of short-lived weakness. But I believe this actually put more fuel into the tank of the bull market.”

 

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