Nvidia’s Earnings Beat Estimates, Yet Drag Down Tech Stocks Globally

American chipmaker Nvidia has a better-than-expected earnings report, thanks to the boom offered by artificial intelligence (AI). Yet, tech stock fell globally as traders were not impressed enough.

Key Takeaways

➔ Nvidia reported a revenue of $30 billion during the second quarter with a growth of 122% YoY.
 

➔ Nvidia said it expected a revenue of $32.5 billion during the current quarter but the market was disappointed due to an even higher expectation.
 

➔ Tech stocks globally began to falter as Nvidia’s stock fell.  

The California-based multinational technology corporation Nvidia (NVDA) reported its financial results for the second quarter of the year. Nvidia reported a record quarterly revenue of $30 billion, a surge of 122% year-over-year (YOY). The extraordinary result even beat the expectations of analysts who estimated the company’s revenue for the quarter to be $28.7 billion with a growth of 113%. This is the fourth quarter in a row that the chipmaker has reported triple-digit revenue growth.

Nvidia’s net income grew 2x during the second quarter to $16.6 billion or 67 cents per share YoY. The tech giant even announced that it is going ahead with a plan to repurchase $50 billion in shares. The company has skyrocketed 180% over the last 12 months.

Nvidia said it expected a revenue of $32.5 billion during the current quarter against $31.7 billion expected by analysts. Yet, it’s not enough for the market as traders seem to have an even higher expectation of Nvidia. The market hoped the company would announce an expected revenue of $37.9 billion for the current quarter. The NVDA stock fell as much as nearly 9% yesterday as traders were disappointed even after such better-than-expected reports.

Image: NVIDIA Corp (NVDA: NASDAQ), by CNBC

Yesterday, the NVDA stock fell as much as nearly 9% afterhours as traders were disappointed even after better-than-expected earnings. Tech stocks on a global level closely mirrored the price movement of Nvidia.

United States

• Advanced Micro Devices (AMD), Nvidia’s rival in semiconductor manufacturing, slumped nearly 6%. Along with Nvidia, AMD is among the leading companies to profit off the AI boom of late.

• Super Micro (SMCI) slumped around 20% as it faces allegations of accounting manipulation levelled by the short seller Hindenburg.

South Korea

• SK Hynix (000660.KS), which supplies high bandwidth memory chips to Nvidia, fell nearly 8%.
 

• Samsung Electronics (SSNHZ), the country’s largest public company, fell nearly 4%.

Taiwan

• Hon Hai Precision Industry (2317.TW), a supplier to Nvidia, fell nearly 3%. Globally, we know it as Foxconn.

• Taiwan Semiconductor Manufacturing Company (2330-TW), another Nvidia supplier, also fell nearly 3%.

Japan

• Tokyo Electron, a leading semiconductor company and the third-most valuable company in Japan, fell around 2%.

Netherlands

• BE Semiconductor Industries or Besi (BESI.AS) went down around 0.4% but quickly recovered.

• However, STMicroelectronics NV (STM), Europe’s largest semiconductor contract manufacturing and design company, didn’t falter as it rose 2%.

Nvidia counts Microsoft (MSFT), Meta (META), Amazon (AMZN), and Alphabet (GOOGL) among its largest clients. Since late 2022, the company has grown ninefold to exceed the market capitalisation of $3 trillion and become the second largest company in the world. It even became the world’s largest company for a while in June, toppling Microsoft from the spot.  

It is obvious that nearly the entire market has bet on Nvidia to lead the AI revolution in semiconductors. We will see if the company can bear the weight of such extraordinary expectations.