(Bloomberg) — In its latest quarterly report, Nvidia Corp. surpassed the average analysts’ estimates, but investors appeared indifferent. The stock did not live up to the elevated expectations of shareholders who heavily invested in the potential of an artificial intelligence boom.
Revenue for the current period is expected to reach approximately $20 billion, Nvidia, the world’s most valuable chipmaker, announced in a statement on Tuesday. This exceeded the average Wall Street prediction of $17.9 billion, though some estimates reached as high as $21 billion.
The immediate market response was a decline of about 1% after sliding as much as 6.3% in late trading.
Despite Nvidia’s impressive growth, some investors anticipated even more from the company. The stock has seen significant gains of 242% this year, largely based on the hope for continued explosive sales gains within the AI industry. This placed Nvidia shares at a level that necessitated an absolutely flawless outcome, as stated by analysts.
Some experts, like Wolfe Research analyst Chris Caso, recognized the astounding performance of Nvidia, particularly given the impact of the US restrictions on China, which have affected sales. Additionally, the company announced new chips designed for the Chinese market in an effort to rebound.
Prior to the report, Nvidia shares closed at $499.44, making it the best-performing stock on the Philadelphia Stock Exchange Semiconductor Index, elevating its valuation to over $1.2 trillion.
Nvidia CEO Jensen Huang has been successful in leveraging the company’s graphics chips into a leading role in “accelerated computing.” The third fiscal quarter saw revenue more than triple to $18.1 billion, with a profit of $4.02 per share.
The company’s data center division remains the star performer, with $14.5 billion in revenue, indicating a 279% increase from the same period last year. Nvidia’s personal computer unit has also rebounded. A competitor to Nvidia, the MI300, is expected to be unveiled this quarter by Advanced Micro Devices Inc.
Nvidia’s success and dominance in the AI chip market have made it a target, with competitors like Microsoft, Amazon, and AMD entering the space. Yet, Nvidia continues to innovate and recently unveiled the H200, the successor to its prized H100 chip.
Despite its success, the company faces challenges due to US curbs on exports to China, a significant market for chips. Nvidia has acknowledged that the constraints could impact future sales in the region.
The company also addressed US export rules, indicating that it anticipates a significant decline in sales to destinations affected by these rules. Nvidia is working on new chips to circumvent export restrictions.
With the trend of AI investment gaining momentum, Nvidia stands out as one of the few businesses that has been able to capitalize on this growing market, which has seen acceleration since OpenAI’s ChatGPT debut in 2022.
As such, Nvidia, based in Santa Clara, California, will continue to focus on innovation and growth, despite the challenges it currently faces within its operating environment.