Nvidia Misses Link in Strong Season for AI Earnings Reports

(Bloomberg) — The results of the world’s largest technology companies brought mostly good news. There’s only one piece missing: Nvidia Corp.

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The company, whose dominance of the chips that do the heavy lifting for artificial intelligence computing has made it the focal point of a market captivated by the booming technology, is not scheduled to report earnings until May 22.

This comes after other releases that showed profits rising at a good pace, demand for artificial intelligence tools leading to increased sales of cloud computing services, and signs of continued heavy spending on artificial intelligence equipment.

“You have a lot of chip buyers coming in saying we’ve bought a ton already, and we’re buying more. The question for Nvidia is: Is that enough?” Mike Bailey, director of research at Fulton Breakefield Broenniman LLC, said on Friday.

Nvidia shares rose as much as 3.6% on Monday, adding more than $70 billion to its market cap.

Among Nvidia’s largest clients, Meta Platforms Inc. Microsoft Corp and Amazon.com Inc. and Alphabet Inc. Capital expenditures will continue at the current pace or will increase this year.

Nvidia shares have rebounded since April 19, when the AI ​​hardware maker fell ahead of the big tech company’s first week of earnings. The stock is up 20% since then, but is still down about 3% from its peak in March. With shares of other AI hardware makers falling in the wake of strong earnings reports, it’s clear that expectations are high.

Advanced Micro Devices Inc. declined. The rival chipmaker fell nearly 9% on May 1 despite raising its forecast for sales of artificial intelligence accelerators this year to $4 billion from $3.5 billion. Super Micro Computer Inc, a server maker whose shares have risen more than 190% this year, fell 14% after its earnings report included forecasts for revenue and profits that far exceeded analysts’ average estimates.

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With earnings at about 80% of the S&P 500 already, technology and communications services companies are beating earnings estimates at a stellar rate. Nearly 90% of technology and communications services companies beat earnings estimates, beating the index’s 79% average, according to data compiled by Bloomberg.

Read more: Nvidia shares hit $290 billion as customers brag about AI

The problem is that the results have had a hard time moving the compass for stocks after a rally that has lifted the tech-heavy Nasdaq 100 stock index more than 35% over the past 12 months. Both groups rank last in the major S&P 500 sectors in terms of stock price movements the day after earnings. The average move for the technology sector fell by about 1.5% while telecommunications stocks fell by 2.7%.

For UBS’ Solita Marcelli, AI computing stocks remain attractive, with combined capex from Microsoft, Alphabet, Meta and Amazon expected to exceed $200 billion this year, $20 billion more than the previous estimate.

“We were encouraged by several positives in technology fundamentals during the first quarter reporting season, which in our view continue to support the investment case in generative AI,” said Marcelli, chief investment officer for the Americas at UBS Financial Services.

Top technology news

  • At Berkshire Hathaway’s annual meeting in Omaha on Saturday, Warren Buffett heaped praise on Apple – after revealing his intention to reduce his stake in it.

  • Jack Dorsey left the board of social media service Bluesky, which he helped fund and popularize, a year ago in the wake of regret over Twitter’s sale to Elon Musk.

  • Hon Hai Precision Industry Co. shares jumped to a record high after recording the strongest growth in monthly sales since the beginning of 2023, which could raise expectations for sales of iPhones and artificial intelligence servers.

  • The $26 billion offering from Apollo Global Management Inc. And Sony Group Corp this week to block talks between Paramount Global and film producer David Ellison.

  • X, the social network owned by Elon Musk, will begin summarizing news events within the app using xAI’s chatbot, Grok.

  • Chinese self-driving company Beijing Momenta Technology has filed confidentially for an initial public offering in the United States, according to people familiar with the matter.

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-With assistance from Stephen Kirkland.

(Share updates move all the time.)

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