Why Nvidia Investors Are Missing the Forest for the Trees
Wall Street quibbles about lower margins and revenue guidance amid stunning growth. Nvidia Corp. investors showed their disappointment in the chip maker's earnings by obsessing over a previously anticipated slight drop in gross profit margins, but they are missing the forest for the trees.Nvidia's GAAP gross margins - forecast at 73% for the company's fiscal fourth quarter - are still enviable across the semiconductor industry. As one analyst told MarketWatch on Wednesday, "Many companies would chew their arm off for a mark-up of over 70%.". Nvidia's shares fell 2.5% in after-hours trading Wednesday. Its shares have risen almost 200% so far this year, so clearly Wall Street wanted more, even as some analysts had already been discussing the margin issue, which is related to a major product transition to Nvidia's new Blackwell line of chips.Analysts also may have had another quibble and were slightly disappointed that the revenue forecast for the fiscal fourth quarter, ending in January