Tech stocks took a hit on Wednesday as investors anxiously awaited Nvidia’s much-anticipated earnings report, which many viewed as a key indicator of the broader market’s stability. The decline was evident across major indices: the Dow Jones Industrial Average (^DJI) dipped nearly 0.4%, the S&P 500 (^GSPC) fell around 0.6%, and the tech-heavy Nasdaq Composite (^IXIC) dropped over 1.1%.
Nvidia, a global leader in AI chip design, released its second-quarter earnings after the market closed. The results exceeded Wall Street’s expectations with adjusted earnings per share (EPS) of $0.68 and revenue of $30 billion, surpassing analysts’ forecasts of $0.64 EPS and $28.8 billion in revenue. Despite this strong performance, Nvidia’s stock fell more than 5% in after-hours trading, indicating that investors had possibly set even higher expectations given the stock’s 160% surge earlier this year.
The market’s reaction wasn’t limited to Nvidia. Shares of SuperMicro Computer (SMCI) plummeted over 19% after the company announced a delay in filing its annual report. Additionally, the retail sector suffered as shares of Abercrombie & Fitch (ANF) and Foot Locker (FL) saw double-digit declines, with Abercrombie & Fitch citing an “increasingly uncertain environment” for retail.
Nvidia’s impact on the tech sector is significant. As the dominant player in AI chip design, controlling up to 95% of the market, its earnings and future outlook are closely watched. For the current quarter, Nvidia expects revenue of $32.5 billion, with the company’s data center business alone anticipated to bring in $25 billion — a staggering 142% increase from the same quarter last year.
Despite concerns about potential delays in the rollout of Nvidia’s next-generation Blackwell chips, analysts remain optimistic. Firms like Goldman Sachs and Loop Capital suggest that these delays may have minimal impact, given improved production yields from TSMC, the company that manufactures Nvidia’s chips.
The market’s reaction to Nvidia’s earnings underscores the high stakes involved in the tech sector’s performance. As Nvidia continues to lead in AI technology, its ability to meet and exceed expectations will likely shape investor confidence in the broader market for the remainder of the year.
