Nvidia fell, but that may be a good thing

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Nvidia fell, but that may be a good thing

A view of NVIDIA headquarters in Santa Clara of Silicon Valley, California, ******* States on August 28, 2024. 

Tayfun Coskun | Anadolu | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know todayThe bottom line

It’s the tragedy of the overachieving child: You’re expected not just to ace every examination, but also excel in extracurricular activities.

So, when you’re just like every other academic genius with perfect grades, that’s merely the baseline you should be hitting.

Such is the plight of Nvidia. Despite posting ridiculous revenue growth numbers that would send any other company’s stock straight into the stratosphere, Nvidia’s shares fell about 6% yesterday.

The culprit: For the company’s fiscal second quarter, revenue rose “only” 122% on an annual basis, compared with three quarters of more than 200% year-over-year growth. The chipmaker’s expected ****** margins for the full year were also slightly lower than anticipated.

As Ryan Detrick, chief market strategist at Carson Group, wrote, “******, taxes, and NVDA beats on earnings are three things you can bank on.” In other words, just beating earnings estimates isn’t enough for Nvidia anymore. It’s more about “the size of the beat.”

To be fair, other companies face the same issue too, though perhaps not on the same magnitude as Nvidia.

“When you have 75% or 80% of companies beating their estimates on any given quarter, that tells you it’s not such a special thing anymore,” said Interactive Brokers chief strategist Steve Sosnick. “Beating estimates is no longer a sufficient condition for a post-earnings rally.”

In any case, Nvidia’s loss yesterday may be good for the broader market. Hear me out. Yes, the S&P 500 was mostly unchanged, while the Nasdaq Composite slipped 0.23%. But the Dow Jones Industrial Average, buoyed by gains in technology stocks like Apple and

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, added 0.59% for a new record close.

That suggests the tech sector and, indeed, the broader market is relying less on Nvidia for gains. The family, finally, isn’t pinning all its hope on one child.

CNBC’s Arjun Kharpal, Kif Leswing, Fred Imbert and Lisa Kailai Han contributed to this report.

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#Nvidia #fell #good

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