It was mainly the Nvidia and other big tech stocks that propelled the markets to record highs. But it’s results caused tremors and led to a sell off.
Nvidia Corporation had reported record quarterly revenue of $30.0 billion, rising 15% from Q1 and up 122% from a year ago. It also returned $15.4 billion to shareholders, repurchasing shares and cash dividends. At the end of the second quarter, the company still had $7.5 billion left under its share repurchase budget. On August 26, 2024, it further approved an additional $50.0 billion in share repurchase authorization, without expiration.
Nvidia failed to rally post earnings even after delivering above the average of forecast by analysts. Was it that good was not good enough and investors wanted great results from the market leader. Even in the past, the stock had traded sideways for quite sometime even after second quarter earnings in 2023 before coming in fast forward mode.
Whether investors have become more concerned about the returns from the artificial intelligence sector or it is plain profit booking on a super run stock, could be anybody’s guess. Then there are analysts who attribute it to just the seasonality in the Presidential election year.
However, when monitored closely on the charts, it was apparent that buying was emerging at lower levels. On smaller timeframes, these moves negated the possibility of short covering behind the price rise. Though overbought on the monthly chart, the dip is likely to be marginal, say up to $95, with upper targets still being $160-180, notwithstanding the Semiconductor Index testing the 200 MA again.
Source of Earning Data - Company's Report
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