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Despite Nvidia's better-than-expected second-quarter earnings for 2024, AI crypto tokens experienced a sharp decline, underscoring investor concerns about market dynamics.
Nvidia’s Q2 Earnings Trigger AI Crypto Decline
After Nvidia's second-quarter 2024 earnings were released, which were better than expected but still didn't wow investors, major cryptocurrencies associated with artificial intelligence took a dive.
In the immediate aftermath of Nvidia's earnings announcement, Artificial Superintelligence Alliance (FET) had a 7.8 percent decline, reaching $1.16. According to data from CoinMarketCap, Bittensor (TAO) dropped 4.5% to $295.22, and Render (RNDR) dropped 6.8% to $5.47.
Investors Unmoved by Nvidia's $30 Billion Revenue
Even though Nvidia's revenue in Q2 2024 was $30 billion, up 15% from Q1 and around $1.32 billion more than previous expectations, investors still weren't satisfied.
In response to Nvidia's announcement, market analyst Lisa Abramowicz said on August 28:
Some experts went so far as to say it would outperform Wall Street expectations by 10% or more.
Nvidia Stock Falls in After-Hours Trading
According to data compiled by Google Finance, Nvidia's stock price dropped 6.89% in after-hours trading from $125.61 when the market closed on August 28 to $116.95 today.
There has been a strong correlation between Nvidia's quarterly performance and earnings releases and the performance of AI crypto assets.
Following the earnings announcement, some in the cryptocurrency market had anticipated that AI crypto tokens would experience a decline.
A certain Shogun, an X user, posted on August 23:
Nvidia Powers AI Development with Advanced Chips
Companies rely on Nvidia chips to train and deploy AI algorithms. Similarly, AI crypto tokens fell after May's earnings release, even if Q1 revenue was up 18% from Q4 2023.
According to Bloomberg's Ed Ludlow, who expressed his belief that Nvidia's business is not slowing down, "The very lofty estimates were very lofty indeed" on August 28.
“The story is still intact. There is no demand issue here. Basically, the cloud computing providers, the hyperscalers we call them, that run data centers, continue to spend on Nvidia’s product,” he noted.
Following "Crypto Black Monday" on August 5, when Bitcoin fell below $50,000 for the first time since February, the market capitalization of AI and big data crypto projects and tokens increased by 79.7 percent in the three weeks that followed.
There was a yearly low of $18.21 billion for the overall market worth of crypto projects involving artificial intelligence and big data around that period.
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