Nvidia (NVDA) Stock Slumps Despite Stronger Third Quarter Profits

Nvidia Shares fell in U.S. pre-market trading on Thursday after the tech giant’s third-quarter results failed to impress investors.

Shares of the chipmaker fell 3.21% around 5:03 a.m. ET, after Nvidia’s quarterly results were released Wednesday, which beat both the top and bottom lines.

Revenue was $35.08 billion, up 94% year-over-year and beating the $33.16 billion forecast by LSEG analysts. Adjusted earnings per share came in at 81 cents, also above analysts’ expectations.

Other chipmakers fell due to the market reaction to Nvidia’s third-quarter results. Actions of Intel, Qualcomm And Micron technology all lost 1% or more in value, while AMD decreased by 0.6%.

The Nvidia crisis has also had repercussions on European semiconductor companies. ASML, a major supplier of chip equipment, fell 0.9%, while fellow Dutch ASMI fell 0.5%. Chip manufacturers BE Semiconductor, STMicroelectronics And Infineon slipped 0.8%, 0.7 and 0.6%, respectively.

Several notable chip names were also in negative territory in Asia. TSMC, which makes Nvidia’s high-performance graphics processing units, fell 1.5%. Contract electronics maker Foxconn fell 1.9%.

Nvidia has largely cornered the market on the high-power chips that power the world’s most advanced artificial intelligence models, such as OpenAI’s ChatGPT.

Despite sales nearly doubling year over year, Nvidia’s third-quarter results showed a slowdown compared to previous quarters. Nvidia previously reported growth of 122% in the second quarter, 262% in the first quarter, and 265% in the fourth quarter of 2023.

Derren Nathan, head of equity research at Hargreaves Lansdown, said in emailed comments Wednesday that Nvidia’s share price decline “suggests that even exceptional is not enough for some investors “, adding that he expects the stock to rebound once markets open.

“NVIDIA has delivered runaway gains for shareholders for many years now, and right now it’s pretty hard to see any major holes in the investment case,” Nathan added.

Analysts are eagerly awaiting the highly anticipated launch of Nvidia’s next-generation chip called Blackwell. During the company’s earnings conference call, CEO Jensen Huang said demand for the chip was outstripping supply.

— CNBC’s Kif Leswing contributed to this report