Last week, Nvidia (NVDA) struggled to break out above $182. By last Friday, NVDA stock dropped by 3.3%. Marvell’s (MRVL) uncertain outlook and Super Micro Computer’s (SMCI) warning about weak financial controls soured AI stock suppliers.
Nvidia earned $1.05 a share on $46.74 billion in revenue. On the conference call, CEO Huang said that reasoning agentic AI is the highest level of its growth drivers. More importantly, this type of AI saw a sharp drop in hallucinations. Hallucinations are problematic because an AI would give completely wrong or made-up answers.
In the next few years, Nvidia will scale the AI markets with Blackwell. Rubin will follow as it captures the $3 trillion to $4 trillion AI infrastructure opportunity.
Risks
After the White House approved chip sales to China for a 15% fee, China said it would not buy the chips. The country believes that the chips have back doors and trackers. Still, Nvidia is forecasting between $2 billion and $5 billion in H20 chip sales to China.
Risks from SMCI
SMCI warned shareholders that it faced weakness in its controls related to financial controls. As a result, it would hurt its financial filing “in a timely and accurate manner.”
SMCI might lose customer confidence if the stock exchange issues a delisting warning.
Clients might also pause SMCI server purchases, along with any other AI-related hardware buying.
Your Takeaway
Firms like Meta Platforms (META), Microsoft (MSFT), and Amazon (AMZN) will continue buying AI hardware. Yet smaller firms might pause orders as they re-evaluated the return on investment.
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