👉 Background: Nvidia started back in 1993 designing really sophisticated computer chips for video game graphics. But by 2006, it began designing computer chips for AI and machine learning. In 2022, when ChatGPT showed the power of AI, the demand for Nvidia skyrocketed. It now has ha Microsoft, Amazon and Meta as its key clients.

‍👉 What happened: In the last two years, Nvidia has seen its share price jump by more than 525%! But last week, its share price took a hit. Nvidia announced its quarterly revenue jumped 74% compared to the same time last year and it beat expectations by nearly 3%.

‍👉 What else: While that sounds pretty good - its share price dropped more than 8% or roughly $500 billion USD. For context, that’s nearly two times the GDP of New Zealand!

What's the key learning?

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💡With rapid growth comes rapidly growing expectations. Nvidia's revenue and earnings per share were better than investor expectations — but not enough better.

💡The Nvidia sell-off was because their results didn’t beat expectations by as much as usual. Get this: the fact it only beat its earnings forecast by 2.84% means it was the smallest “earnings beat” since 2022.

💡Compared to other tech companies in the US, it still smashed their quarterly results. In fact, Amazon, Apple, Alphabet, Meta and Microsoft recorded quarterly revenue growth of 12% on average. But as the second-most valuable company in the world, out of nowhere, it seems like Nvidia is held to a different standard.