Nvidia, the leading AI chip manufacturer, reported a record revenue of $30 billion (£24.7 billion) for the three months ending in July, more than doubling its revenue from the same period last year. Despite this impressive performance, Nvidia’s stock fell over 6% in New York following the announcement.
As a major beneficiary of the AI boom, Nvidia’s market value has surged to over $3 trillion, and its shares have risen more than 160% this year alone. However, Matt Britzman, a senior equity analyst at Hargreaves Lansdown, noted that the market’s sky-high expectations may have contributed to the stock’s decline, as the actual results, while strong, did not surpass the extreme predictions.
The company’s valuation has increased ninefold in under two years due to its dominance in the AI chip sector. For the latest quarter, Nvidia’s operating income soared by 174% to $18.6 billion, marking the seventh consecutive quarter of surpassing both sales and profit expectations.
Nvidia CEO Jensen Huang stated that “Generative AI will revolutionize every industry,” and the company’s results have become a major event on Wall Street, often leading to significant trading activity. A “watch party” had been planned in Manhattan, and Huang, known for his signature leather jacket, has been compared to the “Taylor Swift of tech.”
Alvin Nguyen, a senior analyst at Forrester, remarked that both Nvidia and Huang have become synonymous with AI. While this association has been beneficial, Nguyen warned that Nvidia’s valuation could suffer if AI fails to meet expectations after substantial investments from companies. He emphasized the need for AI to deliver on a massive scale, noting that having a thousand use cases is not enough—there needs to be a million.
Nguyen also pointed out that Nvidia’s first-mover advantage and established software ecosystem are significant assets. However, he cautioned that competitors like Intel could gradually erode Nvidia’s market share if they develop superior products, although this would take time.
