Did Nvidia shares peak in June? Who knows, but the sell-off following its latest results shows an awful lot of good news is priced in.
The stock had enjoyed what Interactive Brokers’ Steve Sosnick described as a “trillion-dollar turnaround” prior to earnings, with “reinflated expectations” suggesting the earnings “whisper number” was well above Wall Street estimates.
So it proved. Revenues were up 122 per cent on a year ago and topped analyst expectations. Guidance also exceeded official expectations, but what Bank of America (BofA) described as “good, not great” wasn’t enough for investors used to outlandishly large earnings beats.
BofA still believes in Nvidia, saying it offers “unique growth” at a “very reasonable valuation”. Most analysts agree, rating the stock a buy.
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Still, Nvidia (and the wider technology sector) have lagged since June. If posting huge growth numbers isn’t enough for increasingly demanding investors, it suggests the market leadership baton may need to be passed to a new group of companies.
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