Overnight – Nvidia “Beats the Street”… then tanks

Equities slipped lower overnight as weakness in Nvidia led a slide in tech just ahead of (and after) the chipmaker’s quarterly results beat Wall St expectations.

NVIDIA’s the world’s most valuable chipmaker, fell 2% leading the broader tech sector lower as investors opted for caution ahead of the company second quarter results after the bell. After the bell the company delivered results, beating on both top and bottom lines, supported by a 154% surge in data centre revenue to $26.27B from the same period a year earlier. The company said it approved an additional $50.0B share buyback plan and said it expected to speed up production of its Blackwell AI chips staring in Q4 and continuing into fiscal 2026.

In a clear insight into investor sentiment, Nvidia fell a further 8% in after-hours trade, as investors chose to focus on disappointing forward revenue guidance, a factor investors would have ignored in the thick of A.I. mania 3 months ago. An inevitable “dip buying” effort pushed the stock back to the middle of the range down around 6%-7%

Nvidia’s shares have spiked 160% so far in 2024, as the firm benefited greatly from increasing investment in artificial intelligence. The firm makes the most advanced artificial intelligence chips in the market, and is considered as a bellwether for AI demand.

Also weighing on the semiconductor sector, Super Micro Computer fell 19% after the AI server provider said it would delay publishing its annual results. The announcement comes just a day after short-seller Hindenburg flagged numerous issues at the company including accounting issues and equipment shipments to Russia and to a Chinese entity that has been watch listed by the US government.

Company Specific

• PVH -6% – after the clothing giant, which owns brands like Calvin Klein and Tommy Hilfiger, reported a drop in second-quarter sales.
• Bath & Body Works -7% – after the retail store chain cut its annual sales forecast, a sign of weaker demand for its pricey products such as fragrances and scented candles in the face of still-high inflation.
• Abercrombie & Fitch -16% – after the clothes retailer’s CEO Fran Horowitz warned of an “increasingly uncertain environment” as macro conditions worsened, even after the company lifted its forecast for annual sales.