Nvidia results fall short of high expectations

US equities declined on Wednesday, with the S&P 500 down 0.6%, the Nasdaq falling 1.1%, and the Dow losing 159 points as investors braced for Nvidia’s earnings report. Tech shares led the drop, with Nvidia falling 2.1%, and consumer discretionary shares also weakened, including declines in Tesla and Amazon. In Europe, equities closed slightly higher, with the Eurozone’s Stoxx 50 rising 0.3%, buoyed by gains in tech and financials, though consumer cyclical shares experienced losses.

Summary for 29.08.2024

Asian markets declined on Thursday, with losses across various sectors, following Nvidia's disappointing revenue and margin guidance. Chipmakers like South Korea's SK Hynix and Taiwan's TSMC saw sharp drops, while broader market sentiment also weakened. In China, major companies such as Baidu, Alibaba, and Tencent fell, and Japan's SoftBank Group also declined. The overall retreat reflects growing concerns about the sustainability of the AI trade and rising costs.

European and US equity markets are expected to open lower, reflecting declines in Nasdaq 100 futures and mixed reactions to earnings reports from Nvidia, CrowdStrike, and Salesforce, amid broader market weakness.

Oil prices steadied this morning following two days of losses, with concerns over cooling demand exacerbated by a smaller-than-expected draw in US inventories. Supply disruptions in Libya and ongoing Middle Eastern conflicts helped limit further declines. The market is now focused on upcoming US GDP and PCE data for insights into economic conditions and potential impacts on demand.

Nvidia reported strong Q2 earnings of $0.68 per share on $30.04 billion in revenue, driven by a 154% surge in data centre revenue and a $50 billion share buyback. Despite a forecasted Q3 revenue of $32.5 billion and plans to accelerate Blackwell AI chip production, shares fell nearly 7% post-earnings. Analysts remain optimistic, with Truist, Jefferies, and Wolfe Research maintaining positive ratings and price targets, citing robust AI demand and future growth potential.

CrowdStrike cut its revenue and profit forecasts following a July outage caused by a faulty software update, which disrupted services for 8.5 million Windows devices. The company expects revenue between $3.89 billion and $3.90 billion, down from earlier estimates, and annual adjusted profit per share between $3.61 and $3.65. Despite a 2.7% drop in shares, analysts view the situation as manageable, noting that second-quarter results exceeded expectations.

Salesforce exceeded Wall Street expectations for Q2, reporting revenue of $9.33 billion and adjusted profit per share of $2.56, which beat estimates. The company raised its annual profit forecast but forecasted Q3 revenue below estimates, signalling ongoing challenges in cloud spending. Salesforce's shares rose 4.3% post-earnings. CFO Amy Weaver announced her resignation, effective upon the appointment of a successor.

Super Micro Computer's shares plummeted 25% on Wednesday after the company delayed its annual report, citing a need to review internal controls. The move follows allegations of "accounting manipulation" from short-seller Hindenburg Research. The company's shares have fallen nearly 65% from its March peak amid broader AI equity declines. Analysts suggest the report lacks new details on alleged wrongdoings, and investors are reacting to potential red flags.

Apple has increased its component orders to 88-90 million iPhones for the upcoming iPhone 16 range, up from last year’s 80 million, according to Nikkei. This move is driven by anticipated growth from new AI features. Despite this, suppliers remain cautious about 2024 iPhone shipments and face challenges from rivals like Samsung and trade tensions with China.

Abercrombie & Fitch raised its annual sales target after reporting stronger-than-expected quarterly revenue, but shares fell 17% as investors anticipated a larger forecast increase. Despite a 89% year-to-date surge and robust quarterly sales growth—26% at Abercrombie and 17% at Hollister—the company's cautious outlook and moderating top-line growth in a challenging macro environment led to disappointment.

Berkshire Hathaway's market value surpassed $1 trillion for the first time on Wednesday, joining tech giants like Apple, Microsoft, and Google. The company’s Class A shares rose 0.7% to $696,502.02, reflecting strong investor confidence. Meantime, it was reported that the company sold approximately $981.9 million worth of Bank of America shares, reducing its stake to $5.4 billion in recent months. The latest sale involved 24.7 million shares. Despite this, Berkshire remains Bank of America's largest shareholder with 903.8 million shares valued at $35.85 billion.

CFRA Research upgraded Trip.com Group to Strong Buy, maintaining a $66 price target due to the company's strong recovery and strategic expansion. The upgrade reflects Trip.com’s impressive first-half performance, with EPS doubling year-over-year and revenue rising 20.7%. CFRA anticipates continued growth through 2025, driven by the travel sector’s recovery and AI-enhanced platform efficiency.

For more information visit https://cc.com.mt/. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice.