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We never loved when teachers graded on a curve. For every test that was buoyed by everyone else’s low scores (and trust us, there were many), there was always another where our stellar, just perfect performance got dragged down by the average. Or it felt that way.
After its latest earnings report, we have a feeling Nvidia doesn’t like being graded on a curve either. Despite posting a fairly stellar Q2 2024 earnings report, Nvidia’s stock still slipped in extended trading, highlighting just how exceptional the company needs to be in order to impress investors.
To be clear, Nvidia didn’t really miss the mark at all: The chipmaker’s revenue growth surged to triple digits for the fourth quarter in a row, and the company upped its guidance for Q3.
Revenue hit $30 billion, a 15% jump from Q1 and a 122% YoY climb. Net income came in at $16.6 billion, beating the $15 billion analysts expected, according to CNN. For the current quarter, Nvidia raised its guidance to $32.5 billion in revenue, up from the $31.7 billion analysts predicted, per StreetAccount, CNBC reported.
So, why is none of this good news, at least in the eyes of investors?
“Death, taxes, and NVDA beats on earnings are three things you can bank on,” Ryan Detrick, chief market strategist at Carson Group, told AP News. This time around, though, “it appears the bar was just set a tad too high this earnings season.” “Here’s the issue,” he added. “The size of the beat this time was much smaller than we’ve been seeing. Even future guidance was raised, but again not by the tune from previous quarters.”
Investing.com senior analyst Thomas Monteiro also stressed in an email to CNN that the relatively small beat merely added “to the multiple warning signs across the tech space earlier in this earnings season,” but maintained “the numbers indicate that the AI revolution remains alive and well.”
And to some, the slight market reverberation is simply a sign of what we already know: All eyes are (always) on Nvidia. “This is the most watched earnings—not just in tech, but in the market, in many years,” Dan Ives, a Wedbush Securities analyst, told AP News. (True that: There was even a watch party at a New York bar for the earnings call.)
“Investors will initially overreact to any sort of short-lived weakness,” Ives continued. “But I believe this actually put more fuel into the tank of the bull market.”
The little chipmaker that could is still chugging along practically printing money, but as investors increasingly expect death, taxes and Nvidia beats, its latest earnings report also shows how far it has to fall.