Market Overview

28 August 2023

Artificial Intelligence Segment Looks Safer After NVIDIA Q3 Report

NVIDIA Corporation (NVDA) soared by nearly 8.5% in after-hours trade late August 23 on after a chipmaker's Q3 report and especially its stronger than expected forecasts for the rest of the year. It was a new all-time record for the market value of NVIDIA as surely the main company of the hyping AI rally. The Wall Street's opening bell on Thursday found the stock "only" 6.5% higher than the closing price of the previous trading day, and then NVIDIA price slid to keep only a couple percent compared to its much more remarkable night time growth.

However, such a volatility is quite normal after a 25% recovery on expectations during the last two weeks period prior to the report itself. Even at current price levels NVIDIA may be considered as a very intriguing idea for parking long money, as this company serves as an iconic symbol of 2023, being one of the bullish pillars amid a nervous market sentiment. 

NVIDIA revenue doubled since the same period of 2022, while its EPS (equity per share) even tripled compared to the first quarter. That's an amazing achievement itself, yet the company openly projected its future sales at $16 billion for the third quarter. This is about $2.5 billion more than in NVIDIA's latest report on August 23. Consensus estimates were also very optimistic, yet expert polls predicted a less rise on average. The major data center business growth is 171% YoY at $10.32 billion, thanks to businesses faster transition to accelerated computing and generative AI. Chip sales for gaming rose 22% to $2.49 billion. The giant also said it would start a $25 billion additional buyback plan, which may additionally contribute to strong confidence of investors in the chipmaker. The spending wave of various enterprises and customers on AI may result "conservatively in an incremental $800 billion" over the next decade," according to Wedbush estimates.

NVIDIA is looking as a powerful leader and motivator for investing crowd. Indeed, the agenda of artificial intelligence serves as a kind of lifeline that protected the market as a whole from falling in a slew of recession fears during this spring and summer. If not for that AI-fuelled rally, stock indexes may face a much more noticeable price. Almost anything could become a source of potential troubles for the broader market now, including any sort of inadvertent side remarks by the Federal Reserve's chair or European Central Bank officials during their speeches at Jackson Hole symposium, or further downgrading some U.S. banks by rating agencies. 

The latest news related to the fast increase in the number of COVID-19 cases in North America, although in a mild form of disease, can be alarming as well. White House officials said they are prepared for mandating new booster shots, so that the shares of vaccine developers like Moderna, Novavax and Pfizer's German partner BioNTech SE spiked last week. This may be only a temporary phenomenon, but one way or another, it is good only for these companies' shareholdes, and certainly not for the rest of the market. Even if a broader number of Wall Street assets may turn to the south again, at some moment and for some reason, the investing crowd would likely start to flee inside the segment of artificial intelligence.


Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade. Indiscriminate reliance on illustrative or informational materials may lead to losses.

Lysakov Sergey
Market Focus
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