Nvidia (NASDAQ: NVDA) shares fell in Wednesdayâs trading. The companyâs stock price was down 5.5% as of 2:45 p.m. ET, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 index has fallen 2.2% and on Nasdaq Composite down 3.3%.
Nvidia shares tumbled alongside new earnings reports from two of the worldâs largest and most influential companies. Alphabet and Tesla each issued the second quarter results and guidance yesterday, and the report kicked off a substantial pullback across the stock market.
Earnings season gets off to a rocky start for âMagnificent Sevenâ
Earnings season is underway, and Alphabet and Tesla are the first members of the âMagnificent Sevenâ to report earnings. The group, which also includes Nvidia, Apple, Microsoft, Amazonand Meta platform, is very influential in shaping the overall stock market sentiment. Unfortunately, Wall Street was not impressed with one of its top quarterly reports yesterday.
While Alphabetâs Q2 report came in with sales and earnings that beat Wall Street targets, the company expects costs to rise in the near term. Management expects the businessâs operating income margin to decline sequentially due to increased infrastructure investment and depreciation. All in all, it is true that the second quarter was very strong for the parent Google, but the moderate delay in profit growth seems to have spooked the market.
The Tesla report is more concerning. While the company was able to post revenue of $25.5 billion and beat the average analyst estimate of $760 million in the quarter, profits fell. The company posted non-GAAP (adjusted) earnings per share of $0.52, missing Wall Streetâs target for earnings per share of $0.62. Price cuts have helped sales, but profits are down, and it looks like the business may be facing some inventory issues.
Alphabet stock is down 4.9% as of this writing. Meanwhile, Tesla fell 10.9%.
A new report has some silver linings for Nvidia
But there is some good news for Nvidia in both reports. Google Cloud revenue grew 29% year over year to $10.35 billion in Q2, tracked by continued strong demand for GPU-led technology. While the market is concerned about Alphabetâs rising infrastructure spending, there is a real possibility that this is a bullish signal for Nvidia.
Tesla is also spending heavily on artificial intelligence (AI) and will continue to do so according to comments on its monthly calls. With growth in the companyâs auto business stalling, investors are wary of the costs associated with perfecting autonomous driving and other artificial intelligence initiatives. But it seems unlikely that CEO Elon Musk will let off the gas, and the company should continue to be an enthusiastic customer of Nvidia.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Foolâs board of directors. Randi Zuckerberg, former Facebook director of market development and spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Foolâs board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Foolâs board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Why Nvidia Stock Is Sinking Again Today was originally published by The Motley Fool
