NVIDIA Corporation NVDAThe second-quarter report was seen as one of the most important earnings data in recent memory and an indicator of how the broader stock market could perform in the future.
The company beat earnings and revenue estimates, but investors pulled back as a result, wiping out a huge amount of valuation from chip stocks.
Nvidia's rock star status: Nvidia has been one of the standout large-cap stocks over the past year, thanks to its incredible growth in the artificial intelligence sector.
With high expectations and a history of beating analyst estimates, investors and analysts focused their attention on the company's second-quarter earnings report and conference call, plus a few viewing parties in big cities.
In the end, the company's pace and comments were not significant enough to drive the stock higher.
Nvidia shares closed at $125.61 on Wednesday, August 28, ahead of the earnings report. On Tuesday, shares are trading at $109.04, down 13.4% in three trading days.
Based on 24.53 billion Nvidia shares outstanding, this represents a loss of $413.1 billion in Nvidia's market capitalization over the last three trading sessions.
For comparison, that $413.1 billion drop is bigger than the combined value of several of the world's best-known companies:
McDonalds Corporation CDM:204.5 billion dollars
Disney DIS:162.1 billion dollars
Coinbase Global COIN:42.4 billion dollars
Add up the value of those three companies and you get $409 billion, which is less than the amount of value erased from Nvidia in the last three trading days.
He Benzinga Pro Chart Below is the change in Nvidia's stock value over the past month.
Read also: EXCLUSIVE: Benzinga Pro's Top 20 Tickers for August 2024: Where Do Tesla, Nvidia, Apple, and AMD Stocks Stand?
Why is it important?:Nvidia shares have soared in value thanks to impressive earnings reports, strong guidance and strong demand.
While the second-quarter earnings report beat estimates, there were several less positive takeaways: Investors and analysts now see the company beating estimates and growing revenue at lower rates than in previous quarters. In essence, the improvements are getting smaller.
Other concerns include potentially lower margins and growth rates in the coming quarters.
Analysts had mixed feelings after the earnings report, with many viewing the sell-off as a potential buying opportunity for long-term investors.
For Nvidia, the stock surge may have been too much of a surprise. It was last May that the company first surpassed the $1 trillion market capitalization milestone. The company then went on to surpass the $2 trillion and $3 trillion valuation levels and, for a brief period this year, became the world's most valuable company at $3.33 trillion.
Nvidia is expected to report its third-quarter financial results in November. The question will be whether the stock can recover before then and whether the upcoming earnings report will be as highly publicized as the recent second-quarter report.
NVDA Price Action: Nvidia shares are trading at $109.04 versus a 52-week trading range of $39.23 to $140.76. Despite the short-term valuation loss, the stock is up 126% year-to-date in 2024.
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Photo courtesy of Nvidia.
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