Chipmaker Nvidia has beaten analysts’ expectations on earnings again, but its stock dropped after it warned about China’s chip constraints.
NVDA – Daily Chart
NVDA traded at $482.80 at midday US on Wednesday, the same level of $502 that capped prices in August.
Nvidia shares dropped around 3% on fears that larger US chip curbs would slow growth in China, its third-largest market, and halt the AI-driven business boom. At one point, the company was on course to erase more than $40 billion in market capitalization.
Nvidia, which has been the leader in artificial intelligence developments with its graphics processing units, said its China market will suffer from tighter export controls. However, the company still forecast revenue of $20 billion, plus or minus 2%, beating analysts’ estimates by more than $2 billion, according to LSEG data.
China contributed over a fifth of Nvidia’s total revenue in the latest quarter, which is a concern for the future. It was also said that companies like Baidu had loaded up on billions of dollars of chips ahead of the ban, which will likely lead to slower sales in coming quarters. Some analysts said Nvidia’s shares were priced for strong earnings and could be at risk.
However, at least seven brokerages raised their price targets for NVDA, with the median now at $625, more than $125 above its last closing price. The company said it will continue to see growth in the Data Center segment in 2025 and plans to increase chip supply quarterly.
Data centre revenues jumped to $14.5 billion, ahead of estimates of $12.97 billion, due to business from cloud infrastructure providers. That was up 279% from the same time last year and 41% from the previous quarter.
