TLDR
- Nvidia stock fell 3.3% on Friday and continued declining 1.2% in premarket trading Tuesday
- The chip maker is experiencing a post-earnings hangover despite Wall Street’s generally positive reaction to results
- Stock has risen 30% this year, but investors remain cautious about further gains without clarity on Chinese market sales
- Nvidia will present at Goldman Sachs conference on September 8, potentially providing updates on China sales and Rubin chip timeline
- Analysts suggest the AI theme is maturing and investors need to be more selective going forward
Nvidia stock extended its post-earnings slide Tuesday morning, falling 1.2% to $172.06 in premarket trading. The decline follows a 3.3% drop on Friday, the stock’s largest single-day loss since reporting quarterly results.
The chip maker’s shares have struggled to gain momentum despite delivering earnings that largely impressed Wall Street analysts. Nvidia’s performance mirrors broader market weakness, with S&P 500 futures down 0.5% in early trading.
Other semiconductor stocks joined the decline. Advanced Micro Devices dropped 1.3% while Broadcom fell 1.3% in premarket activity.
Nvidia has posted a 30% gain so far this year, driven by massive demand for its AI chips. However, investors appear hesitant to chase the stock higher without more clarity on key growth drivers.
The company’s ability to resume sales in the Chinese market remains a critical question mark. The U.S. government halted Nvidia’s chip sales to China earlier this year but recently agreed to grant export licenses in exchange for 15% of revenue generated in that country.
Details about how this arrangement will work haven’t been released by government officials. Any updates on the China situation could move the stock when Nvidia presents at the Goldman Sachs conference on September 8.
Market Maturity Concerns
UBS Global Wealth Management’s chief investment officer Mark Haefele warned that the AI investment theme is showing signs of maturity. He noted the Nasdaq has nearly doubled since ChatGPT launched at the end of 2022.
“We do think the AI theme is looking more mature and that investors will need to be increasingly selective,” Haefele wrote in a research note. His team recommends diversified exposure across semiconductors, software, and internet layers of the AI value chain.
Nvidia’s dominance in AI chip design stems from its early pivot from gaming-focused graphics processing units to AI-optimized hardware. The company has maintained its lead through continuous innovation, recently launching the Blackwell architecture with Blackwell Ultra updates planned.
The company’s next major chip platform, Rubin, is scheduled for production next year. Any timeline updates during the September 8 presentation could impact investor sentiment.
Conference Expectations
The Goldman Sachs Communacopia + Technology Conference gives Nvidia a platform to discuss industry trends and business strategies. Analysts will listen for updates on Chinese market access and Rubin development progress.
However, expectations for major announcements remain tempered. Nvidia just completed its earnings call last week, where management likely shared most material updates with investors.
The stock currently trades at about 38 times forward earnings estimates. This valuation represents an increase from recent months but remains reasonable given the company’s growth prospects in the expanding AI market.
Nvidia’s AI chip business has generated billions in revenue as companies race to build and deploy artificial intelligence systems. The global AI market is forecast to exceed $2 trillion in the coming years.
Despite the recent pullback, Nvidia has delivered extraordinary returns to long-term shareholders. The stock has climbed over 1,200% in the past five years as AI adoption accelerated across industries.
The U.S. recently agreed to grant Nvidia chip export licenses for sales to China in return for 15% of revenue generated in that market.
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