Nvidia (NVDA) shares traded at $218.66 in premarket action on Friday, up approximately 1.8%, as the AI chip giant bucked a broader selloff triggered by Broadcom's weaker-than-expected forecast. The stock's resilience comes despite Nasdaq futures falling 1.2% and S&P 500 futures losing 0.6% early in the session, reflecting lingering tech sector jitters.
The chip sector has been under pressure since Broadcom (AVGO) reported second-quarter revenue that missed expectations and guided for $16 billion in current-quarter AI-chip sales, just below the Visible Alpha consensus of $16.36 billion. CEO Hock Tan left the long-term sales target unchanged, a move that disappointed investors and sent Broadcom shares down 12.6% on Thursday. Other chip stocks, including Advanced Micro Devices (AMD), also declined, while Marvell Technology (MRVL) continued its custom-chip push.
Despite the headwinds, Nvidia's premarket gain suggests investors are distinguishing between company-specific fundamentals and broader sector concerns. Nvidia posted first-quarter revenue of $81.6 billion on May 20, an 85% year-over-year increase, with data center revenue reaching $75.2 billion. The company projected second-quarter revenue of $91 billion, excluding any data-center compute sales from China. Additionally, Foxconn, the top server maker for Nvidia, flagged stronger-than-expected demand signals, indicating its second-quarter numbers could significantly exceed prior forecasts.
Nvidia CEO Jensen Huang also made headlines during a visit to South Korea, where he highlighted robotics as the nation's next major industry and aligned Nvidia's AI and robotics plans with Korean chip, memory, and manufacturing firms. Huang teased "some surprises" and stated he brought "a lot of business for Korea," reinforcing the company's global expansion strategy.
However, risks remain. The market's reaction to Broadcom's slight miss could signal that AI chip hype has outpaced current demand, potentially weighing on Nvidia if sentiment shifts. Other risks include China restrictions, tighter supply chains, and increasing competition from custom-chip rivals like Broadcom and Marvell. Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest, noted that investors are still "buying the dip" without fully questioning chip valuations.
Beyond chip stocks, Friday's U.S. payrolls data could influence broader market direction. Economists forecast an 85,000-job gain and the unemployment rate unchanged at 4.3%. A stronger-than-expected reading could shake confidence in a Federal Reserve pivot to easier policy, further impacting growth stocks like Nvidia.
With a market capitalization of approximately $5.33 trillion, Nvidia remains the key benchmark for the AI buildout. Its GPUs continue to be the industry's primary choice for training and inference of large AI models, even as some customers and rivals develop their own specialized chips. The company's ability to maintain its lead in this competitive landscape will be closely watched by investors.
