(Aug 29): Tech got hit in late trading on Wednesday as Nvidia Corp’s sales forecast disappointed some hoping for more from the chipmaker at the forefront of the artificial intelligence (AI) revolution that has powered stocks.
A US$286 billion (RM1.24 trillion) exchange-traded fund (ETF) tracking the Nasdaq 100 lost 1% after the close of regular trading. Nvidia sank 7% after saying third-quarter revenue will be about US$32.5 billion. While analysts had predicted US$31.9 billion on average, estimates ranged as high as US$37.9 billion. The company also signalled that it is working through production snags with its highly anticipated new Blackwell chip.
“Here’s the issue: the size of the beat this time was much smaller than we have been seeing,” said Ryan Detrick at Carson Group. “Even future guidance was raised, but again not by the tune from previous quarters. This is a great company that is still growing revenue at 122%, but it appears the bar was just set a tad too high.”
On the flip side, Nvidia’s revenue more than doubled to US$30 billion in the fiscal second quarter, which ended on July 28. And the Santa Clara, California-based company’s board approved an additional US$50 billion in stock buybacks.
To Ido Caspi at Global X ETFs, the share-repurchase announcement speaks to management’s continued commitment to profitable growth as the Blackwell transition takes place.
“While revenue growth has decelerated, 122% growth at Nvidia’s scale is still significant, and speaks to a robust AI investment environment,” Caspi noted.
In the run-up to the results, a renewed bout of volatility gripped stocks. The S&P 500 — at one point — headed towards its worst drop since the Aug 5 meltdown. The gauge pushed away from that threshold, closing down 0.6%. The Nasdaq 100 slid 1.2%. Wall Street’s favourite volatility gauge — the VIX — surged to around 17.
Treasury 10-year yields rose two basis points to 3.84%. Bitcoin dipped below US$60,000.
Future gains in global tech stocks should be more gradual after the quick rebound over the past three weeks, with potential headwinds from US macroeconomic data and further news of semiconductor export controls likely contributing to rising volatility, according to Solita Marcelli at UBS Global Wealth Management.
“However, we continue to hold a positive structural view on the broader AI theme, and see ways investors can manage their exposure to the technology that we think is set to drive growth in the years to come,” she said in a note before Nvidia’s results.
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