Shares of NVIDIA Corporation, a computer gaming and data management company, dropped as much as 10% in after-hours trading, as investors penalized the company for releasing a weaker-than-anticipated sales projection for the current quarter.
NVIDIA's announced first-quarter revenue of $8.3 ($6.6) billion was slightly above than market projections, and it increased by 46% year over year thanks to record sales in its gaming sector.
In comparison to the first quarter, NVIDIA's second quarter sales projection was down to $8.1 ($6.4) billion. NVIDIA, like Alphabet and Meta, blamed the slowdown on the impact of the conflict in the Ukraine on European demand as well as COVID-related shutdowns in China, which had an estimated $500 ($397) million impact on revenue.
NVIDIA announced an expansion in its share repurchase program of up to $15 ($12) billion until December 2023. This comes after a $2.1 ($1.7) billion return to shareholders in the first quarter through share repurchases and cash dividends.
Since reaching a peak of $346 ($275) at the end of 2021, NVIDIA shares have lost nearly 50% of their value overall. This decline is part of a larger sell-off of US technology firms. During the pandemic, there was an increase in demand for sonal computers and video gaming equipment, which benefited NVIDIA. However, it is currently facing a more difficult task due to worries that the demand for consumer electronics may start to decline now that inflation in the US is at a 40-year high.
However, over the long term at least five years, ideally longerit is conceivable for share-based investments to generate superior returns to those offered by low-interest savings accounts, particularly after accounting for inflation.
The majority of investors seek out solid fundamentals, such as a history of steadily rising profitability, a dominant market position, or goods or services with room for future expansion. Future share price rise should be supported by these.
However, other elements, such as takeover rumors, can also increase a company's stock price. Investors may also be drawn to recovery bets because they provide the chance for a rebound when share prices are low.