To The Moon

Nvidia shares fell nearly 4% in premarket trading.

Nvidia Corp., which walked away from a $40 billion acquisition of Arm Ltd. earlier this month, failed to impress investors with its latest forecast, a sign of the lofty expectations for the most valuable U.S. chipmaker.

Though the company topped Wall Street estimates with its latest quarterly results Wednesday -- and projected strong growth for the current period.

In the “weird world” of Nvidia, investors’ expectations are always different than the consensus estimate, Vital Knowledge analyst Adam Crisafulli said in a note. Investors may have been looking for more upside, but within the next day or so, they’ll probably come back to the realization that Nvidia has “some of the best fundamental prospects in tech,” he said.

There were some weak spots last quarter. Sales of Nvidia’s auto chips were lower than projected. And its adjusted gross margin came in at 67% -- shy of the 67.1% analysts estimated and below what some chipmakers have reported recently. Analog Devices Inc. had a margin of 72% when it delivered its quarterly results earlier Wednesday.

Supply constraints also are weighing on Nvidia’s data-center chip business, but the situation is improving, Huang said in a conference call with analysts.