Nvidia Disappoints

Wall Street is a weird bunch. You'd imagine that a company that has consistently defied investors' expectations would be better received after it posts another quarter of record sales, but nope, that's not what happened.

On Wednesday, Nvidia released its highly anticipated quarterly earnings and they were, once again, as you'd expect them. Sales almost doubled year-over-year to $35.1 billion, while non-GAAP profit of 81 cents per share was ahead of estimates of 75 cents per share.

Yet, the company's shares fell.

It seems that it's simply not enough for Wall Street that a company is profitable, they want to know whether Nvidia, which is the most valuable company in the world, will continue to grow its profits.

Unfortunately for investors, Nvidia has signalled that its growth may not be as impressive as before.

When announcing its earnings, the company said that it expects to generate $37.5 billion in sales in the next quarter — implying a growth of 69.5% when compared to the recent quarter's 94%, according to Reuters.

It's this slowing of growth which has Wall Street worried, so of course, the company's shares took a hit as soon as the earnings released and continue to trend downwards at the time of writing:

Now before you go and start terming investors a greedy bunch, there might be more at play here, and it all has to do with the company's Blackwell chips.

See, Nvidia's current bread and butter are the Hopper class of chips that have been a huge hit with corporations looking to build data centers to power their generative AI models. They are quite literally THE processors that everyone has been vying for, but they are due to be replaced by the Blackwell chips that are supposedly much, much better than Hopper.

Problem though is that Nvidia announced the Blackwell chips all the way in March but is yet to deliver them in a large enough scale to its customers, like Amazon, Microsoft, and Google. In fact, the company was due to begin large-scale shipping of the Blackwell chips by the end of the year but has hit some snags both technical and those related to supply chain.

Publicly, Nvidia continues to maintain that it will begin Blackwell production shipments in the current quarter that ends in January, but the Information reported earlier that the company is unlikely to meet its previously communicated timelines to big tech.

Which means Nvidia may have inadvertently given credence to the reports by implying that sales in its next quarter may slow. If I had to hazard a guess, the company thinks it won't be able to deliver the Blackwell chips in time for them to make a big difference to its bottom line, at least, not in the immediate future.

And that's what both Wall Street and investors may have caught on, resulting in a bearish view on the stock.

Once the Blackwell chips do start getting shipped though, that might be a whole different story altogether.

Remember folks, long-term view > short-term losses. ;-)

Nvidia ranked #11 on HackerNoon's Tech Company Rankings this week.

In Other News.. 📰

• Michael Saylor's MicroStrategy Makes Mammoth BTC Purchase, Adding 55,500 Tokens for $5.4B — via CoinDesk
• UK seeks collaboration for security research lab to counter Russia and ‘new AI arms race’ — via TechCrunch
• China’s richest man blasts tech giants and government inaction in rare rebuke — via CNN
• Google's US antitrust trial over online ad empire draws to a close — via Reuters
• AI's scientific path to trust — via Axios
• How tech bros bought ‘America’s most pro-crypto Congress ever’ — via CNBC

And that's a wrap! Don't forget to share this newsletter with your family and friends! See y'all next week. PEACE! ☮️

— Sheharyar Khan, Editor, Business Tech @ HackerNoon

*All rankings are current as of Monday. To see how the rankings have changed, please visit HackerNoon's Tech Company Rankings page.

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