Beyond the central bank meetings or even the US elections themselves, another event that marked market movements was the presentation of Nvidia’s results. This Wednesday, the chip manufacturer put the finishing touches on the publication of the company’s accounts. THE Magnificent Seven. These companies end the third quarter of the year improving their profits by 32% on average year-on-year.
Nvidia’s results may have changed the tone not only of Wall Street, but also of the rest of the main global indices. The American market maintains its strong rise of the year and the growth of its profits in this group of companies, led by this undisputed queen. At each quarterly meeting, fear looms over investors who fear that the artificial intelligence fever has gone too far and that a potential bubble has generated around the technology. This is why, as champion of this new technological revolution, The fact that Nvidia continues to beat its own numbers and experts’ estimates is more than crucial.
In this latest earnings report, Nvidia once again beat analyst forecasts in virtually every major metric. The American giant’s net profits exceeded $19.3 billion, or 10% more than the nearly $17.5 billion forecast by experts. It is the company’s highest profit in a quarter in its entire history. “Profits for the quarter reached $19.3 billion. To give you an idea of how big that number is, Nvidia only generated $16.6 billion in revenue in 2021. This highlights the astonishing pace of growth it has seen in recent years . years and it would be absurd to bet against Jensen Huang [CEO de la compañía] and his team in the middle of this AI revolution”, they explain from eToro. Revenues surprised the market by up to 5.5% and exceeded $35 billion. Earnings per share for the quarter were reached $0.78 per share, compared to the estimated $0.72.
But the fact that this company presents better than expected figures is not enough for the market either. Precisely, Its gross margin was 0.6% lower than estimates and it is this factor, as well as the company’s own sales forecasts for its last quarter, which led investors to cancel their positions on the value and this Wednesday, Nvidia fell on the stock market by more than 2% to the European fence.
The production and engineering costs of the new Blackwell chip saga will affect profit margins. So, for the following quarter, Huang placed Nvidia’s gross margin at 73%. “Gross margin is expected to decline to 70 points in the fourth quarter and first half as Blackwell generates lower margins, although it could rise back to 70 points in the second half, once GPU [unidades de procesamiento gráfico] is fully ready,” they underlined from Bloomberg Intelligence.
But, although investors and experts search under the rocks for what Nvidia’s weaknesses might be, the historic growth of its business is unstoppable. These $19.3 billion in profit represent improve this figure year-on-year by up to 109%. For the whole of 2024, analysts expect this figure to exceed 69.1 billion euros. These data imply a return to more than double the already historic figure for 2023 (see graph).
Another thing that Nvidia makes clear is that none of the other Magnificent Seven can follow him. The second company in this group that improved its profits the most this quarter is Amazon, with Annual profit growth of 55%. From May to August, the company founded by Jeff Bezos recorded a profit of almost 15.33 billion euros. For the full year, analysts expect profit to be 80% higher than the previous year, approaching $55 billion.
Of 35% and 34% are the improvements in profits of Meta and Alphabet (parent of Google) respectively compared to those presented at the same period of the previous year. “During the third quarter 2024 earnings call, Mark Zuckerberg [CEO] and Susan Li [CFO] They highlighted the growth and development of Meta AI, which has reached 500 million monthly active users and is becoming one of the most popular AI assistants. This advancement, along with constant investment in servers and data centers, underlines Meta’s commitment to the infrastructure necessary to support the demand for generative AI”, they explain from Punto Research. For its part, For Alphabet, Josh Gilbert, eToro market analyst, highlights from his results that “all key segments exceeded expectations, demonstrating precisely why the company is highly rated Alphabet is a money-making machine and its. growth is impressive. Strong earnings from the rest of the Magnificent Seven, like these results from Alphabet, will keep these stocks higher through the end of the year.”
Tesla kicked off the presentation of the results of these big technology companies and he did it, in addition, by giving a big surprise to the market, to placing its quarterly profits 17% above prior year levels. However, the weak demand for electric cars, added to the strong Chinese competition, which has led the company to have to lower the prices of its models, will end up having an impact on the declaration of annual results in which it is expected that profits decreased by 52% compared to the previous year.
Up to 11% surprise generated the profits presented by Microsoft. The company released its figures for the first quarter of its fiscal year and its profits approached $24.7 billion.
Finally, only Apple showed a contraction in its quarterly profits year-on-yearplacing them up to 36% below those obtained in the same period of the previous year, mainly weighed down by a significant drop in sales in China. However, for the whole year, experts continue to expect that the Apple company will join Aramco and this year it will be the second company in the world to record profits of more than 100 billion dollars.
