Nvidia experienced a significant drop in market capitalization, erasing around $250 billion, despite reporting stronger-than-expected earnings for the quarter ending in June. The company’s earnings per share (EPS) of $0.68 exceeded expectations of $0.65. However, the stock reaction resulted in an over 8% decline in Nvidia’s stocks. Wall Street is now eagerly anticipating the release of Blackwell, the next-generation AI chip from Nvidia.
Shares of Nvidia fell by at least 8% in extended trading, causing a $250 billion drop in market cap. Although the company reported a 122% revenue growth in Q2, it was the lowest increase in the past six quarters. Analysts have noted that while Nvidia performed well, it did not meet the exceptionally high expectations set by its previous quarters. Over the last three quarters, Nvidia’s revenue had grown by more than 200% each time, thereby creating a challenging benchmark for the company. Despite revenue of $32.5 billion, which slightly exceeded the average analyst estimate of $31.9 billion, some predictions had estimated revenue up to $40 billion.
Experts in the market suggest that Nvidia’s performance must now surpass these predictions, as investors are expecting the company to continually shatter estimates. The delayed release of the next-gen AI chip, Blackwell, is now a focal point for investors after Nvidia’s shares rose by over 160% in 2024. According to Nvidia’s blog, Blackwell is expected to set a new standard in performance, with up to four times the capabilities of Nvidia’s current top GPU, the H100. The use of a second-generation Transformer Engine and FP4 Tensor Cores in Blackwell promises increased efficiency and speed for generative AI tasks. Nvidia emphasizes the increasing demand for AI and the need to connect multiple GPUs to meet those demands, as well as the growing importance of advanced open-source AI models in the second phase of generative AI.