Trends are trends because they come and go, with the world of investing and markets certainly being no exception.
In 2020, it was working from home. In 2021, it was the Great Reopening. In 2022, it was crypto and digital assets and a bit of ESG. The year 2023 was placed under the sign of the “Magnificent Seven”. And this year? In short, artificial intelligence, with world leader Nvidia (NVDA) in the lead.
A quick look at the attention and media coverage Nvidia receives in the run-up to its quarterly results makes it the best stock of 2024. It also quickly catapulted the company into rarefied air, where analysts and investors continually place surreal expectations on how much the company sells, how much it is expected to sell, and how much demand for its AI-driven products. chips.
Its most recent earnings report was no exception, with Superbowl-style media coverage preceding and following Wednesday’s numbers.
There’s no doubt why: Nvidia is clearly the king of AI, with massive, well-known customers like Microsoft (MSFT), Google (GOOG), Amazon (AMZN), and many others snapping up its semi -drivers and their hardware at a ferocious pace. improve their AI-based offerings.
But when it comes to investing, what matters most is potential. Although Nvidia beat expectations for the quarter and issued better-than-expected guidance, the stock temporarily stumbled. Investors were either taking profits on their previous investments in the stock or were embittered that the gains – a 94% increase in sales over a three-month period – were no longer what they used to be.
Nvidia previously reported growth of 122% in the second quarter, 262% in the first quarter, and 265% in the fourth quarter of 2023.
Proponents of AI argue that the world is only at the beginning of the transition to the next level of computing, where large language models and algorithms process faster and deeper than ever before. And Nvidia supporters say Nvidia far outperforms its competitors in providing the necessary chips and hardware.
“We are in the very early stages of a transformative moment in computing,” Ben Bajarin, Creative Strategies’ director of consumer technology, told Yahoo Finance on Thursday after the earnings report was released. .
On the other hand, some analysts question whether Nvidia’s customers, including Meta (META), Microsoft and Google, will be able to recoup the billions they spend on AI hardware.
Nvidia’s ability to meet demand for its highly sought-after Blackwell chip is also giving pause to some analysts, including Emarketer’s Jacob Bourne.