Shares in chip designer Nvidia fell 4.4 per cent on Tuesday and remain in the red in pre-market trading as jittery investors secure some gains ahead of the firm’s earnings.
Even though Nvidia is widely expected to report strong fourth quarter results after the market closes today, some shareholders are showing signs of buckling under the potential for disappointment.
Nvidia, which just overtook Tesla as Wall Street’s most traded stock, is experiencing a slight wobble, with shares down over two per cent in pre-market trading at Wednesday midday.
“While the scale of these declines is minuscule compared to the gains the stock has made over the past year, they do give an insight into how investors are positioning themselves ahead of the results,” said Danni Hewson, head of financial analysis at AJ Bell.
“Some investors might have concluded it is better to lock in some profit now in case the results disappoint rather than risk being too exposed if the stock slumps on the news,” she added.
Nvidia has soared over 44 per cent year-to-date and over 236 per cent in the past year as investors bundle in on the company that is fuelling the world’s new artificial intelligence (AI) demand.
The tech giant designs the microchips known as GPUs that can power AI models like ChatGPT and outsources them in a so-called ‘fabless’ model to manufacturers.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the nervousness on Wall Street has also dragged down other tech giants, including Apple, Amazon and Microsoft.
“Investors are baulking at the price put on the big tech names as although another big growth number is expected from Nvidia, the company will need to shoot the lights out again to justify its huge share price gains,” Streeter said.
Nvidia is expecting fourth quarter sales to reach $20bn (£15.9bn), up significantly from the $6.1bn (£4.8bn) reported in the same period a year ago.