Quick overview

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NVIDIA posted a huge drop after its most recent forecast failed to allay concerns about an AI bubble. The largest one-day decline since April 16 occurred in New York, where the shares dropped 5.5 percent to $184.89. The decrease came after an initially impressive first-quarter sales forecast.

NVIDIA’s revenue increased by 73 percent in the fourth quarter, easily surpassing the average analyst estimate. The response provided a clear reminder of the current skepticism about Nvidia. Investors want more reassurance that the chipmaker can sustain its booming AI spending after its sales growth exploded, making it the most valuable company in the world.

According to analysts at Hargreaves Lansdown, investors are still unsure about “whether the current AI spending wave can sustain growth beyond the next few years, and whether Nvidia will remain as dominant as AI shifts from training models to running everyday tasks.”

CEO Jensen Huang dismissed the worries, claiming that clients are already profiting from their newly purchased processing power. Clients will continue to invest at high levels because of this, he said. The Big Short, famous investor Michael Burry, exacerbated the concerns on Thursday.

He pointed out that Nvidia’s purchase commitments now total $95.2 billion, up from $16.1 billion the previous year. That might be dangerous if demand falters. Colette Kress, the chief financial officer, attempted to allay additional worries expressed by analysts, such as the threat of supply limitations.

According to her, the business has acquired enough parts to satisfy rising demand. She told analysts that producing enough of Nvidia’s most cutting-edge chips is still a challenge. However, Kress predicted that the company’s current Blackwell lineup and its upcoming successor, Rubin, would still surpass previous sales forecasts.