From meme stock to a driver of the US economy – how do you like that, Elon Musk? Nvidia – called the new Tesla – exceeded revenue expectations already in May. The most recent earnings report released on Wednesday showed that the AI chip company increased net profit more than 10 times in the second fiscal quarter and doubled its revenue. Who’s laughing now?
NVIDIA (NASDAQ:NVDA) unveiled its financial results for the second quarter of fiscal year 2024, ending July 30, 2023. Impressively, the company’s revenue skyrocketed by 141% YoY, reaching a record $10.32 billion per quarter, more than $2 billion above analysts' estimates of $7.69 billion.
Nvidia's shares are up 212% this year, which is the largest gain among stocks within the S&P 500 index. Back in May, the company became the first chipmaker to breach the $1 trillion milestone. It is now the fifth-largest US company by market capitalization.
The timing of Nvidia’s release as a powerhouse in the American corporate landscape couldn’t have been better. The robust financial report could be the catalyst the market needs to confirm the validity of AI's prominence in the technology sector, as well as instill optimism into the markets as a whole. Against the backdrop of a 36% year-to-date surge in Nasdaq 100-listed companies related to artificial intelligence, this is particularly noteworthy. Not that we witnessed a lot of success stories among rising interest rates and mounting inflation. Maybe Nvidia’s success story can also bring back the appetite for risk to the market.
However, the fact that Nvidia experienced a revenue boom from generative AI doesn't mean the entire tech sector will soon follow. The surge in US stock indices proved once again that a handful of tech stocks are the main culprit. And, as the saying goes, one can’t win a war.
Always carry out your own analysis before investing and keep your eyes wide open.