revenue from the chip maker.
The company’s stock has risen this year by more than 150%, adding to its market value about $1.82 trillion. Also, they managed to lift the S&P 500 (.SPX), but not for a long time because this Monday, in the afternoon trading, the S&P 500 lowered by 2,2% influencing the index.
The Nvidia stock is valued at 37 times its earnings. Other companies that are working in the tech field have an average of 29 times their earnings on the benchmark index.
Some important tech companies, including the giant Microsoft, are trying to build a solid AI infrastructure. To make that possible, they have been buying from Nvidia, their powerful graphic processing units that are capable of handling large amounts of computing power fast.
These Nvidia chips are a hard-to-replace component in the data centers, and this factor has boosted the company’s fortunes.
According to LSEG data from August 23, the chip maker company has recorded an annual jump of about 112% in the Q2 revenue leading to about $28.68 million. Because of the large demand, Nvidia had to boost its production. As a result, its adjusted gross margin has likely dropped more than 3% from the first quarter resulting in 75.8%.
Daniel Morgan, who is a senior portfolio manager at Synovus Trust, also owns shares in the big U.S. tech firms including Nvidia shares. He states "They're not only a benchmark for chips, but they're also a benchmark for AI as a whole,".
Some of the investors have concerns about the Nvidia chips and the company's ability to meet these high expectations. Also, they are wondering how the rhythm of spending on AI will be by Nvidia’s biggest customers.
"If Nvidia misses, (investors are) going to sell off every company in AI.", Daniel also stated.
These concerns have led to a drop of 20% in Nvidia's stock during most of the July month and early August. A recent recovery had raised the stock to just about 5% below its record in June.
According to LSEG data, the chip maker company is likely to record a revenue in the third quarter to $31.69 billion, ending their five-quarter run of triple-digit growth.
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