Is Nvidia competing with itself now?
Nvidia third-quarter earnings beat expectations, but shares dropped 2.5% in extended trading.
The company’s revenue surged 94% year on year to $35.08 billion in the quarter ended 27th October 2024.
Net income climbed 109% from a year ago to $19.3 billion. Sales of Nvidia’s next-generation chip Blackwell, will be limited by supply, not demand, the company reportedly said.
Nvidia didn’t disappoint in terms of third-quarter revenue and net income, but it wasn’t enough for Wall Street. The forecast for the fourth quarter indicates a year-over-year growth of approximately 70%, marking a deceleration from the 265% growth experienced in the corresponding period the previous year.
Nvidia has emerged as the main beneficiary of the current artificial intelligence surge. Its shares have almost tripled in 2024, positioning it as the most valuable publicly traded company.
Numerous end-customers of Nvidia, including Microsoft, Oracle, and OpenAI, have begun receiving the company’s latest AI chip, known as Blackwell.
Nvidia one-year share price chart as of 20th November 2024
The share price decline appears to be due to reserved guidance for Q4, with Nvidia’s management anticipating supply challenges for its next-generation Blackwell GPU. Investors were hoping for a more optimistic forecast, but the cautious outlook was disappointing.
It’s interesting to see how even strong earnings can sometimes lead to a drop in share prices if the future outlook doesn’t meet investor expectations.
