Finance
Nvidia’s business is growing faster than expected. Investors were still disappointed.
Sometimes your best just isn’t good enough. That’s the lesson Nvidia (NVDA) learned Wednesday after the company’s stock price fell 3% despite posting better-than-expected second quarter earnings and guidance for the third quarter.
It’s not as though the company’s growth was unimpressive, either. Revenue jumped 122% year over year to $30 billion, up from $13.5 billion. Nvidia’s all-important data center revenue topped out at $26.3 billion, a 154% year-over-year increase.
But that wasn’t the kind of blowout that investors have quickly grown accustomed to over the last few quarters.
Beyond investor sentiment, Wall Street analysts have also seemingly caught on to Nvidia’s growth after several quarters of big surprises to the upside.
Nvidia’s revenue reported Wednesday beat Wall Street expectations by 4.1%, the slimmest margin since the fourth quarter of its 2023 fiscal year.
As Nvidia’s business has boomed over the last two years, the company’s revenue topped Wall Street forecasts by double-digit percentage points for three straight quarters, including a 22% difference in its fiscal second quarter of 2024.
And as Wall Street appears to have gotten a better feel for Nvidia’s growth at this point in the AI investment cycle, questions have also arisen about the status of Nvidia’s next-generation Blackwell chip.
Ahead of the company’s earnings announcement, the Information reported that the chip, the follow-up to Nvidia’s Hopper line, faced delays that could impact some of the company’s biggest customers including Microsoft and Google.
In her quarterly comments, Nvidia CFO Colette Kress explained that the company made changes to Blackwell to improve its production yield. CEO Jensen Huang, meanwhile, said that the chip is currently being sampled to customers, a major step toward shipping the processor at volume.
Huang said the company expects to ship several billion dollars of Blackwell revenue in the fourth quarter. But the CEO couldn’t pin down exactly how much revenue Blackwell would generate, despite analysts’ questions.
Huang, however, did provide a number of other strong points for Nvidia, including pointing out that demand for Blackwell platforms is well above supply. The CEO also said that Nvidia’s Hopper platform will continue to grow in the second half of the year, and explained that the company expects its data center business to grow “quite significantly next year.”
Huang also said that AI inferencing is driving the company’s data center revenue. Inferencing refers to computers running AI programs and providing users with answers to their queries.
That should put to rest fears of threats to Nvidia’s long-term growth as companies pivot from training AI models to using inference. Huang appears to believe that Nvidia will continue to plow forward as customers use its chips to both train and run their AI models.
Nvidia is still the world leader in AI chips, and it’ll be some time before rivals AMD (AMD) and Intel (INTC) catch up to its hardware and software lead. And while Nvidia may be facing a near-term decline in its stock price, Wall Street is still on board.
In an investor note released following Nvidia’s earnings, BofA’s Vivek Arya raised his price target on the chip designer to $165 from $150 per share, writing, “Despite the quarterly noise, we continue to believe in [Nvidia’s] unique growth opportunity, execution and dominant 80%+ share as generative AI deployments are still in their first 1-1.5 [years] of what is at least a 3 to 4-year upfront investment cycle.”
Raymond James’s Srini Pajjuri also raised the firm’s price target on Nvidia’s stock from $120 to $140, writing in an investor note that “Blackwell delays appear better than feared and management is forecasting a strong ramp in FQ4.”
Pajjuri also said demand for Nvidia’s current-generation Hopper chip continues to be healthy and pointed to anticipated sales growth in Q4, despite Blackwell production ramping up at the same time.
Morgan Stanley’s Joseph Moore, who raised his price target for Nvidia from $144 to $150, called out Nvidia’s sky-high expectations with regards to the company’s stock moves after the earnings report.
“Expectations become more challenging as the superlative becomes mundane, but this was still a very strong quarter given the transitional nature of the current environment.”
Whether that’s enough to satisfy investors next quarter remains to be seen.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
For the latest earnings reports and analysis, earnings whispers and expectations, and company earnings news, click here
Read the latest financial and business news from Yahoo Finance.
One Nvidia (NVDA) bear warned the time has come for investors to sell.
Nvidia failed to meet sky-high expectations when it reported its fiscal second quarter earnings on Wednesday. Nvidia reported profits and revenue that topped forecasts but not by as much as investors hoped, delivering its smallest earnings beat in the last six quarters.
Nvidia stock fell 6% on Wednesday evening in reaction to the results and continued to slide 4% lower on Thursday afternoon. Year to date, the stock remains up nearly 140%.
When asked when it might be time to sell, David Bahnsen, chief investment officer of Bahnsen Group, said, “About a month ago. Two months ago. Today. Tomorrow.”
“People are paying for perfection,” Bahnsen added (video above). “You’re buying Nvidia banking on there being another investor who’s a bigger sucker than you are.”
The warning from Bahnsen comes as the stock has rallied 1,000% from its October 2022 lows. His call is based on one data point: Nvidia’s price-to-earnings ratio, which sits just above 56 after earnings but neared 80 in July.
He offered a reminder that a company and its stock are not the same thing.
“This is not me bashing on Nvidia,” Bahnsen said. “This is a success story. I’m commenting on the valuation — that when you start paying those prices, the risk-reward skew becomes very unattractive.”
Still, it’s a risk that the 89% of analysts with a Buy rating on the stock are willing to take. The stock has zero Sell ratings, which is understandable considering Nvidia posted $30 billion in revenue in the second quarter, a 122% increase over the same period last year.
Nvidia’s future depends in part on other Big Tech companies. Hyperscalers Microsoft (MSFT), Meta (META), Alphabet (GOOG, GOOGL), and Amazon (AMZN) are responsible for 40% of Nvidia’s revenue, according to Bloomberg estimates.
Alphabet CEO Sundar Pichai indicated on the company’s earnings call this quarter that the company’s spending on artificial intelligence would not slow down. “The one way I think about it is when you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting for us,” Pichai said.
Alphabet’s investment in AI, which represents a significant portion of Nvidia’s revenue, could be a bullish signal to come. But those business fundamentals aren’t the only focus.
“The estimates for next year and the year after that are starting to get way, way out of control,” D.A. Davidson managing director Gil Luria told Yahoo Finance.
The next big question for investors is whether the Street’s reaction to Nvidia results this quarter will be enough to dampen earnings expectations heading into Q3.
For Bahnsen, it may already be too late.
Click here for the latest technology news that will impact the stock market
Read the latest financial and business news from Yahoo Finance
Finance
Air Lease Corporation Executive Chairman to Speak at Deutsche Bank Aircraft Finance & Leasing Conference
LOS ANGELES, August 29, 2024–(BUSINESS WIRE)–Air Lease Corporation (NYSE: AL) announced today that Steven F. Udvar-Házy, Executive Chairman, will be presenting at the Deutsche Bank 14th Annual Aircraft Finance & Leasing Conference in New York City on Wednesday, September 4th at 1:30pm Eastern Time. The presentation will be broadcast live through a link on the Investors page of the Air Lease Corporation website at www.airleasecorp.com. Alternatively, virtual attendees may access the webcast directly via this link: Deutsche Bank 14th Annual Finance & Leasing Conference. Please visit the website prior to the webcast to register, download and install any necessary audio software. Any materials utilized for this speaking engagement will be posted in advance of the presentation time to the Investors section of the ALC website at www.airleasecorp.com.
About Air Lease Corporation (NYSE: AL)
Air Lease Corporation is a leading global aircraft leasing company based in Los Angeles, California that has airline customers throughout the world. ALC and its team of dedicated and experienced professionals are principally engaged in purchasing new commercial aircraft and leasing them to its airline customers worldwide through customized aircraft leasing and financing solutions. The company routinely posts information that may be important to investors in the “Investors” section of its website at www.airleasecorp.com. Investors and potential investors are encouraged to consult Air Lease Corporation’s website regularly for important information. The information contained on, or that may be accessed through, ALC’s website is not incorporated by reference into, and is not a part of, this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240828943676/en/
Contacts
Investors:
Jason Arnold
Vice President, Investor Relations
Email: investors@airleasecorp.com
Media:
Laura Woeste
Senior Manager, Media and Investor Relations
Email: press@airleasecorp.com
Ashley Arnold
Senior Manager, Media and Investor Relations
Email: press@airleasecorp.com
Complaints from bank customers in the UK over financial products soared 70% last quarter from a year earlier, mostly driven by disputes linked to credit cards and car loans, according to the country’s Financial Ombudsman Service.
New complaints jumped to almost 75,000 in the three months through June, from about 44,000 in the same period in 2023, the ombudsman said in a statement on Thursday. Of them, more than 18,000 were about credit cards and roughly 16,000 around motor finance, it said.
Ex-Massachusetts officer allegedly murdered pregnant woman he groomed as teen, staged it to look like suicide
Kevin O’Connell & Kwesi Adofo-Mensah Explain Vikings Plan After QB Roster Moves
Man wanted for Mississippi homicide arrested in Pearl
Missouri is cracking down on cannabis edibles. What that means for consumers
College Athletes Reportedly Offered Thousands To Endorse Montana Senator Who Is Against Women’s Sports
See it: Tesla crashes into Columbus convention center at 70 mph
Colorado Rockies game no. 116 thread: Zac Gallen vs José Ureña
Fox News Politics: Georgia the whole day through
Death of missing Oregon girl found in stream ruled homicide
At least 2 dead as tornadoes hit Alabama, damage homes across Southeast
Trump campaign slams Harris as 'still a San Francisco radical' after CNN interview
Donald Trump promises free IVF for women, criticises six-week abortion ban
Donald Trump promises free IVF for women, criticises six-week abortion ban
Army says Arlington National Cemetery worker was 'pushed aside' by Trump aides
'Sickening': VP Harris slammed by school shooting victims' families over recently unearthed comments
-
Connecticut6 days agoOxford church provides sanctuary during Sunday's damaging storm
-
Technology1 week agoBreakthrough robo-glove gives you superhuman grip
-
News1 week agoEx-officer convicted in George Floyd's killing is moved to new prison
-
News1 week agoVideo: Biden Delivers Keynote on First Night of D.N.C.
-
World1 week agoGerman court upholds conviction of former Nazi camp secretary, aged 99
-
News1 week agoVideo: D.N.C. Holds Enthusiastic Roll Call to Nominate Harris
-
Politics1 week agoFormer teacher reveals which students suffered 'the most' under Walz's pandemic-era guidelines
-
World1 week agoPanama deports 29 Colombian migrants from Darien Gap under US deal