Finimize - 🤩 Nvidia's big reveal

What’s going on here?

Chipmaker Nvidia reported results that could turn the rest of the industry into a green-eyed monster.

What does this mean?

Nvidia’s results were the most anticipated in the chipmaker’s three-decade lifetime. Analysts have more than doubled their expectations for Nvidia’s 2024 books over the last year, while investors have sent the stock up 40% this year alone. Despite that, analysts worried that the US government’s ban on exporting chips to China would have put a clamp on the stateside chipmaker’s sales.

Well, looks like they underestimated the stock market machine. Nvidia pulled in $22.1 billion in revenue last quarter, higher than the $18 billion from the one before and trouncing expectations of $20.6 billion. And it said the next round of results will be even spiffier, with sales of $24 billion, well above consensus of $22.2 billion. So with Nvidia already flying past predictions for a while now, it’s no wonder investors have stars in their eyes: the stock was 8% higher just after the news.

Why should I care?

Zooming in: Talk about FOMO.

That chip ban left a nasty dent in Nvidia’s sales and could cause more problems down the road. China is expected to make up less than 10% of its sales, down from 20% last year. And even if stateside sales make up the difference, Nvidia missed the chance at a foothold in the Chinese market. That said, with cloud companies like Microsoft and Amazon as loyal customers, and plenty of governments keen to line their industries with AI solutions, Nvidia’s hardly going it alone.

The bigger picture: Nvidia’s firmly in the squad.

Nvidia has been jostling to become the third-biggest company in the US. Now, investors do have their worries about that whole Big Tech brigade: the US stock market’s been pulled up by only a few tech stocks, which can indicate overinflated prices. At the moment, though, they have profit and projections that seem made of steel, so best not bet on a dot-com-esque bust anytime soon.

What’s going on here?

HSBC was forced to shave billions off the books, despite Europe’s biggest bank killing it at the day job.

What does this mean?

The saying “bad things come in threes” was clearly true for HSBC last quarter. The financial services company took a $2 billion hit from selling its French lending business, had to set aside $200 million to cover possible losses from China’s real estate sector, and was forced to write down its stake in a Chinese bank by $3 billion. That pushed profit down 80% last quarter from the same time the year before. Still, HSBC brought in record-breaking profit for the year as a whole, with higher interest rates making lending more lucrative. But neither that nor the announcement of $2 billion in share buybacks could make investors forgive those forgotten billions, so they sent HSBC’s stock down 8% on Wednesday.

Why should I care?

The bigger picture: Extra-cautious optimism.

HSBC’s been leaning into Asian markets for the last few years, a strategy that had been paying off handsomely. But with China’s ailing property market threatening to derail lenders and the wider economy, banks have been forced to stockpile emergency cash. That money might not get touched, though: HSBC’s top brass believe the worst is over for China’s property sector, doubling down on their confidence in the world’s second-biggest economy.

Zooming out: Bigger isn’t always better.

As one of the world’s biggest lending companies, HSBC is particularly sensitive to changing interest rates. Higher rates mean charging borrowers more for their loans. But with central banks expected to take the head off interest rates this year, HSBC predicts it’ll make almost 10% less from interest payments – minus the interest that it pays out – this year than last, a bigger drop than analysts expected.