Nvidia loses £100bn in value as revenue doubles amid fears AI bubble is about to burst

Chipmaker Nvidia has lost more than £100bn of its value after its latest record results failed to meet sky-high investor expectations.

Second-quarter figures, released on Wednesday evening, showed profits rose 168 per cent to £12.6 billion and sales jumped 122 per cent to £22.8 billion.

Revenue is expected to reach £24.6 billion for the third quarter, more than Wall Street had expected.

But shares fell as much as 6.3 per cent in New York last night, wiping almost £120bn off the company’s £2.3tn value.

Nvidia, which designs and supplies graphics processing units that are key to building artificial intelligence (AI) systems, has become a poster child for the AI ​​boom that has driven markets into the future, with its results watched as closely as major economic figures or central bank updates.

Wednesday’s results beat average Wall Street analyst expectations. Chief Executive Jensen Huang said: “Nvidia delivered record revenue as global data centers are working at full speed to modernize the entire computing infrastructure with accelerated computing and generative AI.”

But investors may have grown accustomed to the company even far exceeding forecasts.

“This was one of those situations where expectations were very high,” said JJ Kinahan, chief executive of trading platform IG North America.

“I don’t know if they could have gotten a good enough number to make people happy,” added Dan Coatsworth, an analyst at AJ Bell.

‘Investors want more and more when it comes to Nvidia.

‘It appears that investors may not have taken the average of analysts’ forecasts as a benchmark for Nvidia’s performance, but instead have taken the higher end of the estimate range as the hurdle to overcome.’

However, the drop in share prices was not enough to trigger a sell-off: New York stock indices, including the tech-heavy Nasdaq, rose yesterday.

Other big tech companies such as Meta (owner of Facebook), Amazon and Apple have all posted gains. Nvidia has enjoyed meteoric growth, with shares doubling in value in the past year alone.

It has been at the centre of the AI ​​boom, providing products to companies including Google, Microsoft and Meta, which have invested billions of pounds in the technology.

In February, it became the fastest company to go from a stock market valuation of $1 trillion to $2 trillion.

Today, with a valuation of more than $3 trillion, it is firmly entrenched among the elite of American technology stocks.