NVIDIA is headquartered in Silicon Valley.
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This report comes from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open keeps investors updated on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Volatile stocks
Major U.S. stock indexes fell on Wednesday, weighed down by Nvidia’s earnings report, which made investors nervous. super microcomputer Also a major drag, the company’s stock price plummeted 19% after the company said it would not file its annual report on time and Hindenburg Research disclosed its short position. On the other hand, European markets ended mostly higher.
The journey is not over yet
The stock market took investors through a bumpy ride in August this year. There was a sharp sell-off at the start of the month on the back of worse-than-expected U.S. economic data. Even though the S&P 500 has recovered losses, Goldman Sach’s Christian Mueller-Glissmann still sees it as a concern. People are no longer interested in the thrill of roller coasters.
Dafei Technology
Berkshire HathawayWarren Buffett’s conglomerate’s market value topped $1 trillion on Wednesday. It is the first U.S. non-tech company to reach this milestone. Berkshire’s shares are up more than 28% this year, far outpacing the S&P 500’s 18% gain. It might be the best birthday present for Buffett, who turns 94 on Friday.
(PRO) Nvidia’s market share
What is driving the market? In recent years, thanks to inflation, the U.S. Consumer Price Index; Personal Consumption Expenditures Price Index; and Nonfarm Payrolls report. Now, due to the explosive growth of artificial intelligence, Nvidia has announced its financial report. Here’s how the S&P has changed over the past year after Nvidia reported earnings.
bottom line
If the chipmaker’s performance over the past year has led retail investors to expect the company to beat expectations, is it fair to say Nvidia beat expectations?
In the recently ended quarter, Nvidia achieved revenue of $30.04 billion, above expectations of $28.7 billion. Even better, the company said it expects revenue of about $32.5 billion for the quarter, beating analysts’ estimates of $31.7 billion.
Nvidia Chief Financial Officer Colette Kress said the increase is because the company expects “Blackwell revenue to reach billions of dollars.” Blackwell is Nvidia’s next-generation artificial intelligence chip.
This is all good news, right? So why did Nvidia’s stock price drop more than 7% in after-hours trading?
Dark clouds are gathering: Nvidia’s gross profit margin fell to 75.1% this quarter from 78.4% in the previous quarter; the company also said it expected the full-year gross profit margin to be “around 70%.”
That was probably the only number that came in below consensus expectations. Analysts expected full-year profit margins of 76.4%.
Shrinking profit margins mean revenue won’t grow as quickly even if it surges. So that’s legitimate cause for concern.
Nvidia’s earnings report was released after the bell, but it unnerved investors and dragged U.S. stocks lower on Wednesday.
Investors are broadly concerned about the sustainability of Big Tech’s boom. High-tech Nasdaq Index down 1.12%, S&P 500 Index down 0.6%, Dow Jones Industrial Average down 0.39%.
Nvidia’s impact on the broader market is likely to be more pronounced when U.S. trading reopens on Thursday. John Marshall of Goldman’s derivatives research team said in a note to clients that the options market “implies a +/- 10% move post-earnings, above the 7% average in the fourth quarter.”
When you expect more than you expect, you actually have two hurdles to clear. This may put unfair pressure on the company and its stock.
——CNBC’s Kif Leswing and Jesse Pound contributed to this report.
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