Nvidia’s Stock Dips Despite Record-Breaking Sales Amid AI Boom

Nvidia, the leading player in artificial intelligence (AI) chips, reported record revenues of $30 billion for the three months ending July 28, surpassing analysts’ expectations of $28.7 billion. This represents a 122% increase compared to the same period last year. Despite these impressive results, Nvidia’s shares fell 6% in after-hours trading on Wednesday and continued to decline by about 2% on Thursday, even though the stock remains up approximately 150% in 2024.

The drop in share price suggests that investors are concerned about the slowing pace of Nvidia’s growth, despite its strong performance. Simon French, head of research at Panmure Liberum, noted that while Nvidia’s sales growth has been spectacular, the latest results indicate a deceleration in that growth.

Nvidia has been a major beneficiary of the AI boom, with its market value soaring to over $3 trillion. The company’s success has been largely driven by its current AI chip, called Hopper, which has been selling well. However, production delays in the next-generation Blackwell chip may be contributing to investor caution.

Jensen Huang, Nvidia’s CEO, highlighted the transformative potential of generative AI, stating, “Generative AI will revolutionise every industry.” However, analysts like Alvin Nguyen from Forrester warn that Nvidia’s dominance could be challenged if rivals, such as Intel, develop competitive products. Nvidia’s position as the “face of AI” has fueled its rise, but it also puts the company at risk if AI fails to deliver on its promises after significant investments.

Nvidia’s results have become a highly anticipated event on Wall Street, with some even organising “watch parties” to follow the company’s announcements. Despite the recent dip, Nvidia’s strong market position and pioneering role in AI technology continue to make it a focal point in the tech industry.