Lukewarm second quarter results from AI powerhouse Nvidia (NVDA) Wednesday have Wall Street bros and the analysts that love them catching all kinds of feelings.
Long a bellwether for how the market views AI in general, the largest company in the world carries enough weight in its $1 trillion valuation to move entire indexes, let alone the tech sector.
That was especially the case over the last two weeks, when handwringing over what Nvidia would say in its second quarter results on Aug. 27 reached a fever pitch.
The TLDR take on what all that was and why it matters? Numbers that showed strong growth from Nvidia were good for AI’s continued bull run; weak numbers would mean that the casino-level spending on AI is finally showing signs of a slowdown.
With investors like the U.S. government and Meta, Google, and the private market plowing billions into AI and its tools, it’s always wise to pause for a minute and see what the short-term projections may be for such a hot sector.
So what do Nvidia’s earnings mean for AI spending?
Well, as is usually the case with analyzing Wall Street, that really depends on who you ask.
Overall, Nvidia managed to surpass market consensus, with reported Q2 sales of $46.74 billion, up 56% from a year ago, a number that eked past the market’s projected consensus of $46.23 billion. Of that number, roughly $41.1 billion was from the company’s data centers business, which missed its expected target of $41.29 billion.
For some tech sector watchers, that disparity (while considered relatively minor in other businesses) was enough to raise alarm bells that a spending Ice Age could be drawing nigh.
“[Data center operator spending] could tighten at the margins if near-term returns from AI applications remain difficult to quantify,” Emarketer analyst Jacob Bourne wrote in a note to investors.
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