Thousands of companies publish quarterly results worldwide, but few attract as much attention as Nvidia (NASDAQ:NVDA). And it’s easy to see why: the chip and GPU giant now accounts for almost 8% of the S&P 500, meaning if it disappoints, the whole market could suffer, and if it exceeds expectations, it can help boost the sentiment.

This time, the results were a mixed bag. On one hand, the numbers look solid: in the second quarter, the company reported record revenue of $46.7 billion, up 56% year-over-year, driven primarily by its AI-focused data center business ($41.1 billion). For comparison, Wall Street was expecting around $46.23 billion.

In terms of earnings per share, the company also exceeded forecasts, coming in at $1.05 compared to the expected $1.00. Net revenue, on the other hand, skyrocketed 59% to an impressive $26.4 billion. However, despite all this, Nvidia shares fell after the report was released and have yet to recover.

The decline wasn’t just because investors had grown accustomed to blockbuster numbers. Instead, it came from the absence of H20 chip sales to China-based customers during Q2. To make matters worse, reports indicate that Chinese authorities have advised local firms to avoid using Nvidia’s H20 chips altogether.

The reaction might have been harsher had Nvidia not simultaneously announced a record $60 billion share buyback program. However, the fact that this was not enough to stem the sell-off suggests that investors seek more clarity on demand trends and export restrictions, especially in the context of trade wars.

So, has Nvidia already peaked?

It seems that clouds are gathering. Beyond geopolitical risks, concerns are growing about valuations in the AI sector. Even Sam Altman has warned of possible over-enthusiasm, and a recent MIT study has revealed that only 5% of companies currently using AI are experiencing revenue growth as a result. 

Meanwhile, competition is intensifying: Alibaba recently launched its own AI chip. Even so, major banks, including JPMorgan, BofA Securities, Citi, and Jefferies, have raised their price targets for Nvidia to over $200 per share, betting that the AI boom will continue regardless of what happens.

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This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
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