Nvidia’s Stock Tumbles Despite Soaring AI Chip Revenue

Despite selling more AI chips than ever before, Nvidia stock fell, which showed worries about the company’s slowing growth rate. 

Wall Street saw a drop in Nvidia stock, even though the giant AI chip maker easily beat predictions after more than doubling its sales.

Nvidia said it made a record $30bn (£24.7bn) in sales over three months. The company has gotten a lot of money from the AI boom; its stock market value has gone up to more than $3 trillion.

But experts are used to Nvidia having huge sales growth, but the most recent numbers show “that rate of growth was starting to slow,” according to Simon French, head of research at Panmure Liberum.

Analysts thought that sales would grow by $28.7bn in the three months ending July 28. Nvidia did even better, with sales rising 122% from the same time last year to this point. After business hours in New York, however, Nvidia’s share price dropped by 6%.

Analyst Matt Britzman of Hargreaves Lansdown said, “It’s less about just beating estimates now.” “Markets expect them to be shattered and it’s the scale of the beat today that looks to have disappointed a touch.”

When Nvidia CEO Jensen Huang announced the new results, he said, “Generative AI will change every industry.”

“If you’re going to raise expectations that high, then you’ve got to keep growing at spectacular rates,” Mr French told the BBC.

The results from Nvidia are now released every three months, and they make Wall Street go crazy with buying and selling shares.

Future Prospects and Market Risks

An expert at Forrester named Alvin Nguyen told the BBC that both Mr. Huang and Nvidia have become the “face of AI.”This has helped the company so far, but Mr. Nguyen said it could hurt its value if AI doesn’t work after companies have spent billions of dollars on it.

Mr. Nguyen also said that Nvidia has a software ecosystem and market-leading goods that its customers have used for decades because it was the first company to market with them. He said that competitors like Intel could “chip away” at Nvidia’s market share if they made a better product, but it would take some time.