The most anticipated earnings report of the season has finally arrived, but investors aren't tripping over themselves to buy the AI chip stock.
The most anticipated earnings report of the season has finally arrived, but investors aren't tripping over themselves to buy the leading AI chip stock. Nvidia 's fiscal fourth quarter earnings and revenue beat analyst expectations .
The company's top line soared by 78% year over year thanks to strong artificial intelligence demand. That said, the stock was only up about 1% premarket, thanks in part to lackluster quarterly profit margin guidance. On top of that, the latest report shows a worrying trend: The market's momentum leader could be slowing down. Deutsche Bank strategist Jim Reid highlighted that Nvidia's revenue beat was the smallest in two years. "That was underwhelming for investors used to much bigger upside surprises," Reid wrote to clients, adding that "a modest beat, and nothing spectacular in terms of guidance, meant the report failed to live up to the hype that has accompanied the chip giant's earnings over the past two years." This could be a problem for a market that's been struggling to find its footing. The S & P 500 barely snapped a four-day losing streak on Wednesday and is down more than 1% for the month. On top of that, options data suggested Nvidia could move the broader market more than usual. According to Goldman Sachs , the S & P 500 is poised to rise or fall 1.3% in the two days following Nvidia's release. That's more than the average 0.8% move seen after the company's previous eight reports. Bottom line: If Nvidia falters, the S & P 500 could add to its February woes. Elsewhere Thursday morning on Wall Street, KBW downgraded Goldman Sachs to market perform from outperform . The firm cited the bank's high valuation relative to history. "GS still has catalysts including a strong trading environment, improving backdrop, restructuring its consumer business and improving margins in Asset Management; however, GS is at peak valuation with potential headwinds against strong market expectations owing to market uncertainty surrounding tariffs, inflation, interest rates and government policies," analyst David Konrad wrote. "These uncertainties have led to a disappointing start of the year in investment banking, driving a recent rotation away from capital market stocks."
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