Trade and geopolitical tensions between China and the US are causing problems for Nvidia, with its founder and CEO Jensen Huang.
Sales for the second quarter, which ended on July 28, increased by 56 percent to 46.7 billion dollars. The profit for the quarter amounts to 1.05 dollars per share. Both sales and profit were slightly above the average forecast among analysts.
Fell after the report
From the quarterly report – presented after the closing of the stock exchange on Wall Street on Wednesday – it also appears that Nvidia during the current quarter, which ends in October, sees continued growth ahead. Nvidia's forecast points to a sales increase to 54 billion dollars.
But China is not included in that calculation. And since the forecast signals a slightly lower growth rate, a concern is now spreading among investors that the two-year boom in AI investments around the world will slow down.
Nvidia's share fell by about 3 percent in futures trading after the report.
15 percent to the US treasury
The Trump administration previously this year banned exports to China of Nvidia's so-called H20 chips, which have been developed specifically for the Chinese market. Nvidia has made an agreement with the Trump administration in August and received clearance for sales in China again, on the condition that 15 percent of the revenue goes to the US treasury.
The detailed rules for how this tax on China sales will work are not yet clear.
According to Nvidia's CFO Colette Kress, Nvidia, in addition to the 54 billion in sales that are already included in the company's forecast for the current quarter, may add 2-5 billion dollars in H20 sales to China – if the specific regulation comes into force.
Fact: The world's highest valued listed company
TT
American Nvidia – manufacturer of graphics cards and processors for artificial intelligence (AI) and machine learning – has with a stock market increase of about 35 percent this year reached a market value of staggering 4,428 billion dollars. The company is thus by far the highest valued listed company in the world.
But large price falls in Nvidia's share can have a major impact on the stock market climate in general and not least hit all small investors who have invested in technology, US or global funds.
