Nvidia’s subdued forecast dampens enthusiasm in AI chip stocks after steady rally

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Investors’ high expectations lead to disappointment

) shares pared some losses in premarket trading on Thursday, shaking off an earlier decline as investors stayed confident about the chip giant’s growth prospects despite a forecast that fell short of lofty expectations.

The forecast followed strong second-quarter earnings that topped Wall Street expectations, and the AI bellwether announced a new $50 billion share buyback as well. “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.”

Nvidia delaying the production ramp-up of its next-generation Blackwell chips until the fourth quarter was not much of a concern, analysts said, with the company seeing strong demand for its current-generation Hopper chips. Investors are also watching next week’s U.S. employment report for signs on whether the labor market weakness that roiled stocks in early August has dissipated.

 

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