Nvidia Stock Falls Amid Q3 Forecasts

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Facts

  • Nvidia shares briefly fell over 4% Thursday, underwhelmed by the firm's third-quarter forecast and despite its second-quarter results beating expectations, before recovering to $122.56, or down 2.43%.[1][2]
  • The chipmaker's shares had fallen around 6% on Wednesday, with forecasts placing next quarter's revenue at $32.5B — sitting on the bottom end of the market's expectations of $31.9B to $37.9B.[3][2]
  • Contrary to this forecast, Nvidia — which briefly became the S&P 500's most valuable firm in June — grossed $30B in the second quarter, a 122% increase over the same period last year.[4]
  • Nvidia's results temporarily hit other tech stocks, too, with several firms reportedly losing a combined total of around $100B on Wednesday. By Thursday, companies, including Broadcom and Advanced Micro Devices, saw a boost to their shares.[5][1]
  • With a reported market value of $3.2T, Nvidia — which has seen its shares increase over 150% this year — also has an 80% dominance of the AI chip market.[6]

Sources: [1]Reuters, [2]Forbes, [3]BBC News, [4]Associated Press, [5]Inc and [6]Sky News.

Narratives

  • Narrative A, as provided by Bloomberg. The market's reaction to Nvidia's narrower-than-usual revenue forecast highlights the sky-high expectations for the AI giant. While some investors see this as a sign of overvaluation, others view it as a natural correction in a still-strong market. Either way, there's good reason to be cautious.
  • Narrative B, as provided by Technologymagazine. While Nvidia has undoubtedly faced a sobering reality check as its latest projections fell short of sky-high expectations, causing the company's stock to tumble and sending ripples through the tech sector, this is merely a temporary setback. The AI chip giant's long-term prospects are optimistic as it will continue to be a trailblazer in the booming AI industry.