Market Analysis

Nvidia, the leading artificial intelligence chipmaker, reported quarterly sales of $30 billion, surpassing expectations but reflecting a slowdown compared to its previous rapid growth. Despite being hailed by Wall Street as the most significant stock globally, Nvidia's share price dropped by about four percent in after-hours trading.

Under the leadership of CEO Jensen Huang, the California-based company saw its profits reach $16.5 billion, more than doubling from the previous year. However, investor concerns are emerging as Nvidia's extraordinary growth, driven by the AI boom, shows signs of leveling off.

Nvidia's powerful AI chips and software have become essential for the world's largest tech companies, including Microsoft, Google, Meta, Tesla, and Amazon, to train generative AI models and manage the intensive computing required for these technologies.

Before the latest earnings report, Nvidia's share price had surged approximately 160 percent year-to-date, contributing significantly to the S&P 500 index's gains this year. However, in July, Nvidia's stock fluctuated as investors questioned the immediate profitability of generative AI. Recently, the share price has rebounded, nearing its previous highs when the company briefly became the world's most valuable by market capitalization.

The market had anticipated Nvidia's sales to be around $28 billion, more than doubling from the previous year.

"Nvidia once again exceeded expectations, delivering outstanding results with margins that rival its best quarters, despite growing economic uncertainties and concerns about an AI bubble," commented Emarketer technology analyst Jacob Bourne.

Nvidia's earnings reports have become highly anticipated on Wall Street, as the company consistently outperforms expectations, often tripling its revenue and profit.

Despite these impressive figures, some analysts are concerned that Nvidia's growth may be stabilizing.

"Now, it's not just about beating estimates – the market expects them to be blown away, and today's results, while strong, fell slightly short of those lofty expectations," noted Matt Britzman, senior equity analyst at Hargreaves Lansdown.

Investors were also closely watching Nvidia's forecast of $32.5 billion in revenue for the next quarter. Although this exceeded average analyst predictions, some were disappointed that the era of triple-digit growth may be waning.

There was also intense scrutiny on potential delays in the launch of Nvidia's new Blackwell technology, the successor to the highly successful Hopper line of AI chips. CEO Huang assured that the new product line would be available to clients in the coming months, with strong sales of the existing AI chips expected to continue.

Paraphrasing text from "Reuters" all rights reserved by the original author.