Nvidia The stock fell 5% on Thursday as investor concerns about the artificial intelligence infrastructure boom dampened enthusiasm over its better-than-expected earnings.
Income for his fourth fiscal quarter reached $68.13 billion, ahead of analyst estimates of $66.21 billion, according to LSEG. Total revenue was up 73% from what Nvidia reported a year ago and guidance also beat expectations.
“The debate has shifted away from short-term outcomes and toward the sustainability of AI capital spending, amid concerns about its quantum, monetization and potential degradation of cash flow,” Richard Clode, portfolio manager at Janus Henderson Investors, told CNBC via email.
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Nvidia shares over the past year.
Investor AI ConcernsHyperscalers saw more 1,000 billion dollars erased of their market capitalizations at the beginning of February, before reducing these losses in recent weeks.
Semiconductor manufacturer Advanced microdevices fell 17% after issuing forecasts that beat many analysts’ expectations earlier this month, even though some had predicted a stronger outlook.
“The market is currently facing widespread AI concerns,” said Dan Hanbury, co-portfolio manager of global strategic equities at Ninety One.
“What’s weighing heavily on investors’ minds is how Nvidia can maintain its phenomenal growth rate while its core customers – the hyperscalers – are mostly depleting their cash flow, spending on AI-related investments.”
Data centers fuel growthNvidia’s data center unit, which houses its market-leading chips, has fueled its revenue boom, accounting for 91% of sales.
Data center revenue was $62.3 billion for the quarter, beating expectations of $60.69 billion, according to StreetAccount.
Nvidia issued upbeat forecasts, with fiscal first-quarter revenue of $78 billion, plus or minus 2 percent, well above analysts’ forecasts of $72.6 billion.
“The forecast of $78 billion in revenue was well above even the most optimistic buyers’ expectations and the fourth consecutive quarter of accelerating growth, contrary to fears of a slowdown,” Clode said.
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