How the world’s most valuable company disappointed Wall Street

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Nvidia’s rise from obscurity to become a $5.5 trillion market-moving beast brings with it a lot of wild expectations.

For the past week, the US market has essentially flatlined as investors waited anxiously for the release of Nvidia’s third-quarter sales and earnings. This year, this has become a quarterly phenomenon.When the results came, after the close of normal trading, there was a tinge of disappointment despite the numbers coming in a little over consensus estimates, albeit below some of the more wildly optimistic expectations.

Its market capitalisation has risen 200 per cent this year alone, and it is now valued at almost $US3.6 trillion , overtaking Apple as the world’s most valuable company. Its results and share price movements move markets, and not just those in the US. Indeed, demand for the chips appears to be substantially outstripping the ability of Nvidia and Taiwan Semiconductor Manufacturing Company’s ability to supply them, which augurs well for the first half of next year.

Nvidia does have competitors – Microsoft, Intel, AMD, Amazon and Google are developing their own AI chips and there are hosts of smaller companies and start-ups scrambling to come up with their own products for advanced AI models – Nvidia’s dominance, first-mover status and financial strength provide it with an opportunity to entrench its position.

The Dutch company, ASML, which manufacturers the state-of-the-art extreme ultraviolet lithography systems vital to make the most sophisticated chips, is unable to sell its latest generation of machines to China.

 

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