Nvidia posted another record quarter Wednesday, beating expectations widely, but the stock market reaction reflects a split view among investors, as Robbie Whelan writes.
Shares of the world's largest publicly traded company rose after Chief Financial Officer Colette Kress, on a call to discuss the company's second-quarter earnings, said to expect 70% revenue growth in the company's 2028 fiscal year. Shares gained as a forecast of accelerating growth helped calm rising anxiety throughout the market surrounding the viability of the artificial-intelligence trade. Those concerns and worries about overspending initially sparked a selloff in Nvidia shares.
Kress, the CFO, defended the strategy of using its balance sheet to help customers on the earnings call. Kress said Nvidia expects big frontier AI labs like OpenAI "to become the largest technology companies in history."
The market reaction is more telling than the actual results as evidence that investors are still focusing on the massive investments in the tech space, and how that will pay off.
Or as Will Rhind, founder and CEO of Granite Shares, a manager of exchange-traded funds with $16 billion in assets, put it: "There's not a lot of concern in the market anymore about demand for Nvidia's chips. The bigger questions now are about the broader AI narrative."
Whether or not Nvidia's earnings beat Wall Street's expectations is no longer so important, Rhind said, because the company's shares are no longer "priced to perfection" as they were in previous periods.
Read on here for Robbie's report, or dive deeper here:
Markets A.M. Newsletter: The $1.5 Trillion Question Nvidia's Earnings Can't Answer
Nvidia's $279 Billion Supply-Chain Gamble
Wall Street Is Counting on Nvidia to Keep the AI Party Going
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What Else Matters to CFOs
After a flurry of companies such as Intuit and Dick's Sporting Goods lowered their guidance this week, J.M. Smucker noted a rosier view. The owner of Jif peanut butter and Folgers coffee raised its outlook for the year after logging higher-than-expected adjusted earnings and sales in the first quarter.
The company said it now expects net sales to decline 1% to 2% in its fiscal 2027, compared with a prior forecast for net sales to decline 3% to 4%. Analysts polled by FactSet are looking for sales of $8.78 billion in the coming year, marking a 3% decrease from last year.
The company previously said it expects sales to decline in the coming year as it leans away from price increases, looking instead to drive volume growth in key areas and improve profitability.
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