Nvidia, the chipmaker behind the artificial intelligence (AI) boom, saw its share price fall again following its earnings release amid continued constraints on the chain supply.
Its third-quarter trading update showed that demand for its cutting-edge generative AI chips would continue to outstrip supply for at least another year.
Some might say it’s a nice problem, but these revenue restrictions have largely been blamed on Nvidia’s failure to beat market expectations for revenue this year, thus holding back its performance.
Nvidia said revenues came in at just over $35 billion over the three months, above the consensus of $33 billion, according to LSEG data.
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The company, which tops the ranking for most valuable listed company several times since the end of spring, has experienced an unprecedented rise in its share price, which really began during 2023.
But despite stocks performing well – they are up 190% in the year to date and up ninefold in two years – they have had a tougher time in the second half of 2024.
Indeed, investors are worried about the prospects for AI, competition from Nvidia and delays in the next generation of Blackwell chips.
Nvidia shares experienced a surprise fall despite exceptional profit figures for the first six months of its fiscal year and plunged again when widespread nervousness in the American market settled in early September on the outlook for the American economy.
Fears that technology stocks were overvalued also contributed to the situation.
Nvidia boss Jensen Huang said Wednesday of the sales: “The AI era is in full swing, propelling a global shift toward NVIDIA computing.
“The demand for Hopper and the anticipation for Blackwell – in full production – is incredible as core model makers scale pre-training, post-training and inference,” he told about chips.
Jensen Huang is the CEO of Nvidia. Photo: AP
Market analysts noted ahead of the earnings update that a positive stock price reaction would depend not only on revenue forecasts being destroyed, but also on the outlook broadening.
They also sought reassurance that Blackwell’s rollout was considered to be on track to help justify the more recent share price recovery, one that the technology sector has seen more generally since the proclamation of Donald Trump’s victory in the American presidential election.
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One of the bottlenecks for Nvidia’s chip supply is manufacturing partner TSMC’s limited capacity for advanced production techniques.
Revenue guidance for the fourth quarter was estimated at $37.5 billion, compared to market forecasts of $37 billion.
Shares were down more than 2% in after-hours trading, following a decline during Wall Street’s regular hours.