NVIDIA Corporation (NASDAQ:NVDA) surged after the chipmaker reported better than expected second quarter results and guidance that blew away consensus expectations. The news sent shares of the AI darling soaring by nearly 10% overnight. Other AI stocks like C3.ai Inc (NYSE:AI) and Palantir Technologies Inc (NYSE:PLTR) also climbed. However, optimism wilted once markets opened for trading Thursday morning.
Over 20 Wall Street analysts raised their price target on Nvidia’s stock after it published results. Several analysts even upgraded the stock to Buy, ratcheting the number higher. In total, 55 analysts think NVDA is a Buy, 4 have a Hold rating on the stock, and almost no one thinks the stock is sell.
Despite the bullishness, by noon Nvidia’s stock pared its gain from 10% to just 1.5%, while others stocks like C3.ai and Palantir were sharply lower.
The dip lower could simply be a classic sell the news reaction, some observers noted. Others said it was profit taking after the more than 200% gain in Nvidia.
Goldman’s Sachs’ trading desk called the reversal in AI "significant" and questioned whether it was the start of a tougher stretch for AI given “full positioning.”
The fade in Nvidia coincided with broader weakness in the Nasdaq 100, which declined by 1.4%. Other indexes suffered losses as well, with the S&P 500 down 0.75% and the Dow falling 0.5%.
Softness in equities was tied to caution as focus turned away from Nvidia to comments from Fed Chairman Jerome Powell in Jackson Hole on Friday. Powell’s comments are expected to provide a window into the Fed’s thinking ahead of FOMC meetings later this year.