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Technology

AI chip giant Nvidia shares fall despite record sales

Artificial intelligence (AI) chip giant Nvidia says its revenues for the three months to the end of July more than doubled compared to a year earlier, hitting a record $30bn (£24.7bn).

However, the firm's shares fell by more than 6% in New York after the announcement.

Nvidia has been one of the biggest beneficiaries of the AI boom, with its stock market value soaring to more than $3tn.

The company's shares have risen by more than 160% this year alone.

"It’s less about just beating estimates now, markets expect them to be shattered and it’s the scale of the beat today that looks to have disappointed a touch," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

The sky-high expectations are driven by its valuation, which has surged ninefold in value in under two years thanks to its dominance of the AI chip market.

Profits for the period soared, with operating income rising 174% from the same time last year to $18.6bn.

It was the seventh quarter in a row that Nvidia had beaten analysts' expectations on both sales and profits.

"Generative AI will revolutionise every industry," said Nvidia chief executive Jensen Huang.

The results have become a quarterly event which sends Wall Street into a frenzy of buying and selling shares.

A "watch party" had been planned in Manhattan, according to the Wall Street Journal, while Mr Huang, famed for his signature leather jacket, has been dubbed the "Taylor Swift of tech".

Alvin Nguyen, senior analyst at Forrester, told the BBC both Nvidia and Mr Huang have become the "face of AI".

This has helped the company so far, but it could also hurt its valuation if AI fails to deliver after firms have invested billions of dollars in the technology, Mr Nguyen said.

"A thousand use cases for AI is not enough. You need a million."

Mr Nguyen also said Nvidia's first-mover advantage means it has market-leading products, which its customers have spent decades using and has a "software ecosystem".

He said that rivals, such as Intel, could "chip away" at Nvidia's market share if they developed a better product, though he said this would take time.

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