Following the aforementioned resurgence of fear, uncertainty and doubts about the future growth of the AI chip market, the market abandoned AI chip stocks, both high-quality and low-quality ones.
Meta (META) to report its first quarter earnings after the market closes this Wednesday, with Wall Street looking for another big revenue boost for the social media giant. Meta shares have been rising, up 116% in the last 12 months and more than 45% so far this year. That’s much better than its main rival, Google (GOOG, GOOGL), which is up 45% over the past 12 months and 16% so far this year.
Prior to the presentation of the balance sheet, the shares of the social media firm rose 0.4%. While part of Meta’s stock performance has to do with the recovery in the digital advertising market, the company’s stock price actually soared last quarter after the company announced it was contemplating a dividend of $0.50 per share and increased its share repurchase authorization by US$50 billion.
For the first quarter, Wall Street expects Meta to report earnings per share of $4.30 on revenue of $36.1 billion, according to analyst estimates compiled by Bloomberg. That would mark another big jump in EPS and revenue from the same quarter last year, when the company reported earnings of $2.20 on revenue of $28.6 billion.
Nvidia: what to expect from its actions
AI chip stocks corrected sharply, and Nvidia (NASDAQ: NVDA) is no exception. The firm’s shares fell 10%, following leading semiconductor stocks due to fears about a slowdown in artificial intelligence. It is unclear whether last week’s sale marks the end of the “artificial intelligence mania“or it’s a temporary setback. Even if AI chip stocks decline, NVDA may not be affected.
The leader’s actions NYSE climbed 0.6% in the previous one, but in the last five days it has registered a red of 1.3% and in the last month 12%. However, in the last six months the positive balance is around 90%.
The consensus of experts gathered by Bloomberg considers that the company will achieve an earnings per share of US$5.5. That is, it would be capable of quintupling its net profit in one year compared to its market capitalization, which is again above two trillion dollars.
Why did Nvidia stock sell off more sharply than its competitors?
Following the aforementioned resurgence of fear, uncertainty and doubts about the future growth of the AI chip market, the market abandoned AI chip stocks, both high-quality and low-quality ones. With this, it is neither surprising nor out of place that sentiment changed for NVDA so markedly.
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Thats not all. It’s also not surprising that Nvidia’s stock declines that day exceeded the declines experienced by major competitors.. Advanced Micro Devices (NASDAQ: AMD) shares fell just 5.44% on the day. Intel (NASDAQ: INTC) stock fell just 2.4%.
A big reason why Nvidia fell the most may have to do with growing concerns that these competitors are making big strides to catch up with this AI chip pioneer. According to current market sentiment, if AMD and Intel become more formidable competitors in the field of AI chips, this will also have a severe impact on Nvidia’s future growth.
Source: Ambito
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