Nvidia's latest earnings report has sent shockwaves through the AI crypto sector. The chip giant posted impressive numbers. But it wasn't enough to satisfy investors' lofty expectations.
Major AI-related cryptocurrencies took a nosedive following the release. Artificial Superintelligence Alliance (FET) plummeted 7.8% to $1.1663. Bittensor (TAO) dropped 4.5% to $295.22. Render (RNDR) slid 6.8% to $5.47.
Nvidia reported a whopping $30 billion in revenue for Q2 2024. This marked a 15% jump from the previous quarter. It also beat Wall Street estimates by $1.32 billion.
But apparently, that wasn't good enough. Market commentator Lisa Abramowicz summed it up on X: "Better-than-expected doesn't cut it for Nvidia. Evidently, investors expect this company to blow away expectations."
Some analysts had predicted Nvidia would smash estimates by at least 10%. Talk about high hopes.
Nvidia's stock price felt the heat too. It closed at $125.61 on August 28. In after-hours trading, it tumbled another 6.89% to $116.95.
This isn't the first time AI crypto tokens have been tied to Nvidia's performance. It's become a bit of a pattern. Some crypto folks saw it coming. One X user named "Shogun" called it days before: "You might catch gains being long until a day before, but I'd bet you're better off shorting for the dump after."
Nvidia's chips are the backbone of AI model training and deployment. After its Q1 earnings in May, AI crypto tokens took a similar hit. This was despite Nvidia's Q1 revenue jumping 18% from the previous quarter.
Bloomberg's Ed Ludlow weighed in: "The very lofty estimates were very lofty indeed." But he's not all doom and gloom. "The story is still intact. There is no demand issue here. Basically, the cloud computing providers, the hyperscalers we call them, that run datacenters, continue to spend on Nvidia's product."
This latest drama comes on the heels of a wild ride for AI and big data crypto projects. Their market cap surged by 79.7% in just three weeks after "Crypto Black Monday" on August 5. That day saw Bitcoin dip below $50,000 for the first time since February. AI crypto's total market cap had hit a yearly low of $18.21 billion around that time. Talk about a rollercoaster.