Nvidia Corp. Jensen Huang, co-founder and chief executive officer, holds up the company’s AI accelerator chips for data centers as he speaks during the Nvidia AI Summit Japan, Wednesday, Nov. 13, 2024, in Tokyo, Japan.
Akio Who | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. As you see? You can subscribe. Here.
What you need to know today.
Nvidia beat expectations, but shares slipped.
Nvidia Third-quarter earnings beat expectations, but shares fell 2.5 percent in extended trade. The company’s revenue rose 94 percent year-over-year to $35.08 billion in the quarter ended Oct. 27. Net income rose 109 percent from a year ago to $19.3 billion. Demand for Nvidia’s next-generation chip Blackwell is “expected to exceed supply for several quarters in fiscal 2026,” Nvidia CFO Colette said.
Adani charged with fraud in New York
Indian billionaire Gautam Adani, Chairman of India Adani GroupHe was indicted along with others on charges related to a bribery and fraud scheme in federal court in New York, authorities said Wednesday. Adani and other defendants are accused of paying more than $250 million in bribes to Indian government officials to secure more than $2 billion in lucrative solar power supply contracts.
The Dow breaks down.
US markets were mixed on Wednesday ahead of Nvidia’s earnings after the bell. gave S&P 500 was flat, Dow Jones Industrial Average It rose 0.32 percent and broke its four-day losing streak Nasdaq Composite It fell 0.11 percent. of Europe Stokes 600 Little changed, the European Central Bank warned that the biggest economic risk to the eurozone was no longer high inflation but weak growth.
UK inflation sharply higher in October.
Inflation is still a tough nut to crack for the UK. On an annual basis, prices rose 2.3 percent in October, sharply higher than September’s 1.7 percent increase, according to data from Britain’s Office for National Statistics. Economists polled by Reuters had expected the October figure to be 2.2 percent. The reading reduces the likelihood that the Bank of England will cut interest rates in December.
[PRO] The 10-year Treasury yield could be a drag on stocks.
Production on 10-year Treasury note was at 4.402%, sharply higher than 3.6% in September. If the yield breaks the psychological level of 4.5%, strategists say it will weigh on the stock market.
The bottom line
There is a concept in psychology called the “hedonic treadmill.” This theory posits that as people achieve success, their expectations rise along with it. As a result, people need an ever-increasing intensity of improvement to feel the same level of happiness that they initially felt.
Nvidia Seems like a victim of this concept. The chipmaker did not disappoint in terms of third-quarter revenue and net income, compared to analysts’ expectations polled by LSEG.
For the current quarter, analysts forecast current quarter sales of $37.08 billion. The chipmaker predicts it will beat it by about $400 million.
Nevertheless, Nvidia shares fell about 2.5% in extended trading.
Investors are likely looking at the rate at which Nvidia is growing its numbers versus its past performance, not just whether it’s beating expectations.
Although Nvidia’s third-quarter revenue grew 94% year-over-year, it’s a slower pace than Nvidia’s growth in the previous three quarters, when sales grew 122%, 262%, and 265%, respectively. , as CNBC’s Kif Leswing notes.
The same goes for Nvidia’s forward guidance: a nearly 70 percent increase in sales for the current quarter compared to a year ago. Break out the champagne? No, investors believe only some lukewarm beer is warranted, as this third-quarter growth rate is below 94%, and dramatically lower than Nvidia’s 265% annualized growth in the same period a year ago. is
Aswath Damodaran, a finance professor at New York University’s Stern School of Business, told CNBC that the fact that Nvidia shares slipped in extended trading after such a sterling report “tells you how much the expectations game is playing out at Nvidia.” has gone”.
“They don’t just have to beat analysts’ estimates; they have to beat them by 10%.”
It seems that investors have enjoyed Nvidia’s surprising performance for so long that they have become desensitized to it. Maybe it’s time to get off the treadmill?
– CNBC’s Kif Leswing, Samantha Subin and Brian Evans contributed to this report.
